It’s not complicated; it’s specific to the individual. There is no one-size-fits-all solution as no two of us are the same.

The simplest way to think about it is that it replaces the economic value of the individual to the family. So, if the insured person becomes disabled, unable to work or dies, there are clearly financial implications to the surviving family.

The value of this is based on their income, debt level, (mortgage and other debt), the desired lifestyle of the surviving family members and any future events that it was intended would be paid for by the insured e.g. university education.

Each family’s circumstances may be different. Some have very large mortgages, some are debt free, some have five children while others have none. While some are nuclear families (married Mum and Dad with children) some are solo parents, some are same-sex couples and others, blended families.

On this note, things change! From 2013 census, the number of solo parents was determined to be over 200,000* and the number is growing.

Change is inevitable and constant. Kids leave home, one partner decides to leave work to be with the children, some get made redundant and accept a lower paying job, you may divorce, or perhaps you buy a new home with a bigger mortgage. Others have older family members move in, while some are supporting their grandchildren.

Constant change is why you need to review your insurance annually. This ensures that you have the right types and levels of cover. Not too much, not too little and types appropriate to your circumstances. And of course, as you age, premiums can rise, and health issues develop. There is a lot to consider, but it’s not complicated, it’s logical and specific to you.

*archive.stats.govt.nz/Census/2013-census/profile-and-summary-report/qstats-families-households/hone-parent-children.aspx
(Credit – Life Chart, Asteron Life)