A new baby. A bigger mortgage. That long awaited promotion and salary increase. Major life events do more than change your circumstances, they can also trigger a option inside your insurance policy known as a “special event” or “life event” benefit. This option allows you to increase your cover (within limits) to better suit your needs without new medical underwriting. It is a great benefit however, many policyholders have no idea the option exists!
When you first took out your life insurance, total permanent disability (TPD), or trauma cover, you were assessed on your health at that point in time. A likely clean bill of health would have resulted in straightforward terms and limited exclusions. But as you get older, life has a way of changing the picture.
If your health has shifted since your policy began, then applying for additional cover would need to take into account these changes and could now mean higher premiums, exclusions, or in some cases the additional cover being declined altogether. Using the life / special events option, enables you to sidestep this process entirely. It allows you to increase your cover (to certain limits) with no new medical information required and is simply subject to you being able to provide proof of the life event and applying within the time frame specified by your policy.
The good news is that this is not a loophole. It is a specified feature of your policy, designed precisely for this situation.
The specific triggers vary between New Zealand insurers, but common qualifying life events include:
Terms and conditions will apply based on your policy wording, but are typically not arduous.
James is 38 and works as a project manager in Auckland. In his early thirties he took out life, trauma and total permanent disability (TPD) policies. A few years later, James was diagnosed with type 2 diabetes. Manageable, but the kind of condition that would make any new application for personal insurance more complicated, more expensive, or in some cases unsuccessful.
When James and his partner welcomed their first child recently, he decided that he wanted to increase his cover to provide additional security for his family in the event something happened to him.
Based on the special event clause, the birth of his child triggered an option to increase his life, trauma and TPD policies, without any further medical assessment required. Shortly after his son was born James spoke to his Threefold adviser, provided the information required by his insurer and was able to increase his level of cover under each of these policies by 25% – without needing to complete a full application or new underwriting.
Had James applied for a new policy from scratch, he would likely have faced a diabetes-related exclusion, a premium loading, or both. Instead, James was able to increase his cover using the special event option, giving James and his family peace of mind that if something were to happen and they needed to claim, that their insurance cover was aligned to their new needs.
Special event benefits are genuinely valuable, but only if you know they exist, how to apply them and that you apply for within the right timeframe.
If you have had a significant life event happen recently, or have one on the horizon, it is worth checking whether your existing cover can grow alongside it. If you are keen to understand the specific terms of your policy, contact our insurance team for a free review or book a chat via this link.
A ‘special event’ or ‘life event’ benefit is a feature included in many New Zealand personal insurance policies that allows the policyholder to increase their level of cover following certain qualifying life events, without having to provide new medical information or undergo fresh underwriting.
Common qualifying events include marriage or civil union, the birth or adoption of a child, taking out or increasing a home loan, or a significant salary increase. The specific events that qualify depend on the individual policy wordings and insurer.
No. That is the key advantage. Policyholders can apply to increase their cover following a qualifying special / life event without supplying updated medical information. This makes it particularly valuable if the policyholders health has changed since the policy was first taken out.
Yes. Most New Zealand insurers require policyholders to apply within 30 days to 12-months of the qualifying event. Specific time periods vary by insurer and will be included in your policy. Missing this window typically means policyholders cannot use that particular event to trigger a cover increase.
Generally, yes. Many policies restrict this option to policyholders under the age of 55. After that age, the special event benefit may no longer apply, even if a qualifying life event occurs. Please check your policy for the specific limits applied by your insurer.
The amount you can add is usually capped per event and may also have an overall lifetime cap. The specific limits will be set out in your policy document.
Check your policy document or contact your Threefold adviser – we are here to help and can explain what options are available to you.
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.