It’s human nature to look at the bottom line. When it comes to insurance, many Kiwis flick their eyes straight to the monthly premiums and ask: “How much is this going to cost me?”
But the true measure of insurance isn’t the number on your bank statement each month, it’s the value it delivers when life doesn’t go to plan. The trick is finding the right balance – enough cover to make a real difference, but not so much that the premiums themselves become a burden.
At first glance, cheaper policies look appealing. Why pay more when you could shave $20 to $30 off your monthly bill? The answer becomes clear when you imagine a claim. If your policy only provides a limited payout, or doesn’t cover the specific circumstances you find yourself in, those savings disappear instantly. Not being able to make your mortgage repayments or a lack of income replacement can cost far more than the extra premiums you saved.
The opposite extreme can be just as problematic. If you load up on every type of cover available, the monthly commitment can start to feel overwhelming. And insurance that feels unaffordable is insurance that risks being cancelled altogether, leaving you without protection when you need it most.
Balancing cost and value starts with understanding what you really need to protect. For some households, it’s about ensuring the mortgage gets paid. For others, it’s about replacing income so the family can maintain their lifestyle. And for many, it’s a mix of both.
It’s also worth thinking ahead. Premiums often rise as you get older, so what feels affordable today might look different in five or ten years. Asking yourself “Will this still fit my budget later on?” is just as important as asking “Does it fit today?”
This is why it is important to have regular policy reviews so your adviser can look to make sure your cover fits both your budget, age and stage, for instance you might not need as much life cover at 50 when your mortgage debt has decreased, but trauma insurance may now be more appropriate.
The real return on investment isn’t measured in dollars, but in peace of mind. The right cover means knowing that, no matter what happens, your family won’t be left scrambling to make ends meet. It means being able to focus on recovery during an illness rather than worrying about bills. It means giving your partner or children the stability they need if you’re not around.
When you look at insurance through that lens, the conversation changes. Instead of asking “How much does this cost?” it becomes “What am I really buying here?” If the answer is stability, security and breathing space for the people you love, then you’re getting real value.
If you’ve had a change in circumstances and are interested in looking at your insurances, book a complimentary chat with one of our advisers by clicking here. Plus, if you complete a free mortgage, insurance or KiwiSaver review this month, you’ll also go in the draw to win a month’s free mortgage repayments on us, up to $5,000!
The content of this article should not be taken as financial advice, or a recommendation of any financial product. These insights are based on current economic commentary, market pricing for interest rates, and our personal opinion. Threefold is not liable or responsible for any information, omissions, or errors present.