Should low income earners pay more for their life insurance?

Technically, yes!

It is a grim fact that men classified as having ‘low income’ will die on average 6.5 years younger than higher earners.  And for women, this gap is 4.7 years.

This means that low income men and women are at higher risk for life insurance… in the same way that smokers are higher risk for life insurers… and low earners (technically) like smokers should pay more for their life insurance cover.

I started thinking about this issue when a report from Otago University caught my eye.

According to this report, the life expectancy gap between rich and poor in New Zealand is not only significant, it’s widening! Over the 20-year period from 1981 to 2001, life expectancy for high earning men increased by 2.1 years and by 1.4 years for women.

So, do we believe that life insurance companies in New Zealand will at some point introduce a question on the Life Insurance application form along the lines… “How much do you earn?”

Nope, never!  (And nor should we.)

Yet… (believe it or not) it does happen in some countries… South Africa being a case in point.

If you apply for life insurance in South Africa, you will typically be asked to declare both your level of education and monthly income on the application form.  If your level of income and/or education is low, you’ll be quoted a higher price for your life insurance!

Talk about kicking someone when they’re down!  Tough place Africa.

Ok, it’s travel insurance not life insurance.

But when insurance companies pull out the old ‘weasel clauses’ to get off paying what should be a legitimate claim, it gives all insurance companies (including life insurance) a bad name.

I’m doing a lot of travelling around the world lately and on a recent flight from South Aftrica to London, someone in “luggage handling” prised open my bag, went through my belongings and stole my camera.

Ok. No problem. Isn’t this the reason that I took out travel insurance with Travelsure??

But alas… my claim was rejected because I did not report the theft to the police in London within 24 hours as stated in the policy – I was referred to the small print on page 13 and also somewhere on page 17.

How stupid I was not to open my bag and check what was missing right there on the floor next to the luggage carousel. And never mind that I didn’t notice the camera was stolen… because the thieves left the camera bag… which I opened only 72 hours later.

You see, with Travelsure, ‘reasonable circumstances’ that mitigated against my notifying the authorities within 24 hours are irrelevant.

It seems that Travelsure couldn’t wait to dig out the weasel clauses and do away with my claim! Seriously efficient they are… my claim was rejected in 5 minutes.

“That’s insurance for you” – people will say. ‘No latitude’… ‘no discretion’… ‘no allowance for the circumstances of each case’… ‘quick to take your money’… but full of excuses when you have a claim…

So how about this tagline then?…

Travelsure…. taking the sure out of travel…

Pinnacle Life has paved the way for Chinese speaking New Zealanders to buy life insurance by partnering with leading Chinese Insurance brokers, Hwa Hsin Insunance (HHI).  

For Chinese people wanting to know more about Pinnacle Life’s products they can now visit the HHI website to get all product information in Chinese… see a Life Cover policy translated into Chinese here.

ABOUT HHI

Established in 1993 by Janet Lee, HHI is a highly professionally outfit and one of the most established and largest insurance brokers serving Chinese people in NZ.

HHI operates from 2 Auckland offices based in Howick and Greenlane and they have advisers fluent in English, Mandarin and Cantonese.  

As well, Janet Lee runs a radio program on AM936 (every Thursday 4:20pm) where she shares her knowledge of what is new in the NZ insurance industry. She also writes weekly news columns for The Oriental Times and The Chinese Herald.

WHAT THEY OFFER

The sample policy documents from Pinnacle Life have been translated into Chinese and HHI plan to provide these sample Chinese policy documents as well as a summary of each of Pinnacle Life’s products on the HHI website.

Also, Chinese applicants purchasing Pinnacle Life products through the HHI website will receive free additional benefits because of their association with HHI.

Click here to visit the HHI website and/or make contact with their professional team.     

Received on this blog…

Question    Hi , we – an immigrant family – are interested in 2 life policies. We are NZ permanent residents and have lived in NZ for the last 6.5 years. What happens if we buy the policies and in the future we need to go back to our birth country for a while, e.g. to take care of dependent grandparent. Will we remain covered?   

Answer    You are eligible to buy a life insurance policy from Pinnacle Life because you are a NZ resident. Once you have purchased the policy, you are covered wherever you are in the world. Even if you return to your country of birth and give up your NZ residency, you will still remain covered. Because it is a NZ policy, your claim will be paid in NZ Dollars to the bank account of your choice, anywhere in the world.

Pinnacle Life was profiled on Kea NZ’s website recently.   Here are excerpts from the story… 

Kea, 6 August 2007 

“Kea corporate member, Pinnacle Life based in Auckland, achieved a world first in May when it launched its online life insurance product.” 

”New Zealanders based in a number of countries around the world can buy their life insurance within minutes, just by completing a simple-to-follow online application process.” 

“A major advantage for Kiwi expatriates is the portability of Pinnacle Life’s policy which can be applied for whilst resident in a number of countries including: Australia, US, Canada, UK, Singapore and Hong Kong.” 

“Pinnacle Life policy fees are paid in New Zealand dollars from wherever the policy holder is resident. Current fees are 10-15% lower than other similar life insurance policies on offer in

“Given the large numbers of Kiwis residing overseas who plan to return to New Zealand in the future, having a life insurance policy which you pay for in NZ dollars is preferable to maintaining a policy which needs to be paid in US dollars or British Pounds, particularly when you’re earning NZ dollars,”  

”Pinnacle Life reports excellent pick-up of their online life insurance from Kiwis both locally and internationally, with results surpassing initial targets. The company has plans to introduce new products over the next few months.” 

Read the full story on the Kea website…

Buying life insurance has always been restricted by geography.  You could only ever buy a NZ life insurance policy if you live in NZ, a UK policy if you live in the UK and so on – you get the picture.

Ask insurers why this restriction has existed and you’ll get several answers – all of them true – along these lines:

• Life insurance is sold by insurance advisers face to face. (Hard to do if you live overseas.)
• Insurance companies require paper-based application forms with signatures and posting documents back and forth between countries is not very efficient
• Life insurance pricing is only valid for a given country.  If you live somewhere else, there are different risks and therefore a different price.  And life insurers only price their products for the local market.

Thanks to the internet, this has all changed.

Pinnacle Life is a New Zealand based life insurer.  We launched our direct life insurance offering to Kiwi’s living in any one of 8 countries: Australia, USA, Canada, UK, Ireland, Singapore, Hong Kong and of course, New Zealand.

The foundations of Pinnacle Life’s unique offering are:

• Debunking the myth that consumers need to be sold  life insurance – consumers are now buying life insurance direct and on-line
• Harnessing the power of the internet to enable instant access to Pinnacle Life’s products from anywhere in the world
• Dispensing with paper signatures.  We’ve made the checking of a box an acceptable way to bind the insurance contract.
• Creating insurance rates that are the same for Kiwi’s living in any one of eight countries.

Whilst Pinnacle Life has launched a world-first in this regard, we don’t think it will be the last.  We think, over time, all life insurance will become the global commodity it should be.

Related posts

Life insurance online, at last!  14 May
Life insurance and kiwis overseas 16 May

Received the following from a reader yesterday…

“Kiwis are all over the world and while it is refreshing to see a NZ company thinking outside the box and the country, why are you restricted to only a few countries?”

If you haven’t seen the Pinnacle Life website it tells you that Kiwis living in Australia, UK, Ireland, Canada, US, Hong Kong and Singapore are all entitled to buy life insurance policies from Pinnacle Life online. The reader didn’t leave a name, but thanks for the question anyway. The answer…Together with our reinsurer Hannover Re, we have identified these 7 countries as having reasonably similar mortality risk to New Zealand. This means that our product and pricing can be standardised across these countries, simplifying our distribution. And at the same time, there is a good chance of us being able to source medical or death records in English, should they be needed either now or in the future.At some point we may venture beyond these countries, but then we may need to offer differential pricing. This is something we could look at later, based on demand.