What is a life insurance “Special Events benefit”?

Most New Zealand life insurance plans include a free feature called a “Special Events Increase”. This can be a vital part of life insurance – we’ll take a quick look at how it works.

Let’s say you have a life insurance policy that is worth $400,000. Then, because you have increased your mortgage, you want to increase your life insurance by $100,000. Usually, in this situation, you would need to provide information about your current health to the insurer (by completing a new application). The insurer would then assess this information and increase your cover. Often this is simple, however if you have experienced any health issues since you originally started your life insurance, the insurer might not allow you to make the increase (or they might allow the increase, but only at a much higher than usual premium). The reason for this is that any increase is treated by the insurer as a brand new application – which they might or might not approve.

However if your policy has a “Special Events” benefit, you can increase your cover without having to provide any health information at all to the insurer. So you’d simply make a request for the insurer to increase the insurance, and you wouldn’t have to complete an application form. And the most important part is that even if you’ve suffered a health issue, the insurer can’t deny your increase, or charge you higher than usual premiums. Even in situations where a person has become very ill, the Special Events benefit means that they are guaranteed to be able to increase their cover if a special event arises (typical special events are taking out a mortgage, having a child, moving house etc).

Special Events benefits have some limitations – there is usually a cap on the amount of the increase you can make, and people over a certain age are not eligible – however this can be an extremely useful benefit. So, if you’re thinking about starting a life insurance plan, make sure any plan you’re considering includes this.