How does term life insurance work?

Term life insurance is a type of policy that covers you for death or terminal illness, for a pre-determined period of time. The term of cover is usually a set number of years, often between ten and twenty, or until you reach a certain age.

With a fully underwritten life insurance policy typically becoming more difficult to secure as you get older, term life insurance can be a great way for older people to protect what’s important during the later years of your life.

But with several types of life insurance available, it’s important to do your research to make sure you choose the right type of cover for you and your specific needs.

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Everything you need to know about life insurance

Differences between life insurance and term life insurance

While they both offer financial protection against death or terminal illness, there are key differences between life and term life insurance.

Life insurance is also known as all of life insurance because it covers the policyholder from the moment the policy is activated until death. This often means applying for a policy can come with substantial health questions, a medical and a blood test. Whereas with a term life insurance policy offering cover for a set number of years or certain age, the underwriting may be less complicated, and have less questions asked about your medical history.

Did you know?

Seniors Term Life Insurance allows Kiwis to apply all the way up to age 79, making it available when it’s needed most.

How does term life insurance work?

Term life insurance is a contract between a policyholder and an insurer that pays a lump sum benefit to a nominated beneficiary – your family, or other loved ones – when you pass away or to you if you are diagnosed with a terminal illness (usually with less than 12 months to live depending on the provider). In short, term life insurance is designed to help make sure your family can still enjoy the lifestyle you have worked hard to provide for them and prevent financial difficulty - adding to the emotional trauma of losing a loved one.

Purchasing term life insurance should be guided by your own circumstances. Ask yourself the questions:

  • How long should the term be?
  • How much life insurance do you need?

Term life insurance can provide cover for a certain number of years which can assist your loved ones cover general living expenses if you’re no longer around to work and earn money. A Term life insurance payout can be used to pay off any debt that would otherwise be passed on to your loved ones, covering the mortgage for several years, or even making sure your children’s education is covered until they graduate.

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What to consider when taking out term life insurance

When thinking about protecting your family’s financial future with term life insurance, it’s important to work out how much cover you need. This will largely depend on your individual circumstances and plans for the future. You could consider speaking to a professional adviser, or if calculating for yourself, there are other things you might want to consider:

Work life

Take into account whether you are currently working, and how long it will be before you plan to retire. Without a regular income, you will need sufficient cover to maintain your desired quality of life. The earlier you plan to retire, the more cover you will need.


Add up your personal savings, investments or other forms of income. With sufficient assets or cashflow, you may not need as much cover to protect the financial future of you and your loved ones.


Are you carrying zero debt, or do you have an outstanding mortgage, credit cards or personal loans? If you have debt, you will need more cover to make sure you or your loved ones won’t face financial difficulties in the event of you suffering a terminal illness or passing away.

Your health

Medical costs can be difficult to manage even with a regular income, so assess your current health and take into account possible future complications when working out how much cover you will need. Premiums are generally based on your age, with factors such as being a smoker affecting the type of cover you qualify for and how much it will cost. With Seniors Term Life Insurance, you don’t need to take a blood test or fill out any complicated paperwork to apply, just answer 8 questions about your health over the phone and you could be approved on the spot.


Participating in dangerous activities such as skydiving or canyoning can affect the type of cover you qualify for and how much that cover will cost. Make sure you answer all qualifying questions honestly, because false or incomplete information can result in your policy being cancelled or limited in some way.


The more dependents (including your spouse, children or grandchildren) you have, the more cover you may need. Consider how long you want to provide for them financially after you’re gone. You may also need to factor in education costs for any children who are still living at home, including further education.

Quality of life

If you or your loved ones are expecting to maintain a high quality of life, it makes sense that you will need more cover than if you are planning a humble retirement. Discuss your plans and expectations with your family to make sure you have enough cover.

Exclusions and waiting periods

Like health insurance, your cover may be subject to waiting periods before you can claim, or you might not be able to claim certain things. This will be outlined in your Policy Document, so always read through it thoroughly before applying for cover.

Did you know?

56.6% of Kiwis believe that talking about our plans and wishes with family and friends is a good way to plan for the future and minimise the financial burden we could potentially place on them, so it can be a good idea to openly discuss your life insurance plans with you loved ones.

Learn more about Term Life Insurance

Considering life insurance?

Who needs term life insurance?

As we get older, our insurance needs change. That’s why it’s important to know about the different types of life insurance products that are available and which one is best for your specific situation. At New Zealand Seniors, we believe insurance should meet your needs, not someone else’s. That’s why we focus on providing beneficial cover for Kiwis over 50.

With Seniors Term Life Insurance, anyone aged 45 to 79 can apply for up to $100,000 cover, which means you can protect your family financially for the next 20 years – or until you turn 85, whichever comes first. You don’t need to take a blood test or fill out any complicated paperwork to apply. Just answer eight questions about your health, then decide on the amount of cover that works for you and your loved ones – it’s that simple!

How can New Zealand Seniors help?

With New Zealand Seniors, you can tailor your policy to suit your individual needs and budget. Choose the level of cover you need, and rest assured knowing you’re backed by a respected and award-winning insurer.

Benefits of choosing Seniors Term Life Insurance

Flexible cover amount that suits you

Choose how much you or your family will receive if you pass away or become terminally ill. You can set a benefit amount from $10,000 up to $100,000.

Easy to apply with no medicals

Simply answer eight questions about your medical history over the phone. Once approved, you can get covered in minutes.

Immediate cover

Once your policy is set up, you’ll be covered straight away for death by any cause, and for terminal illness1 (excluding suicide for the first 13 months).

20% advance payout to cover funeral costs

When your family makes a claim, we’ll give them 20% of the benefit amount in advance, so they won’t have to worry about the cost of your funeral or other immediate expenses.

Triple payout for accidental death

Your family’s benefit amount will be tripled if you pass away from an accident, helping with any last-minute expenses they might face.

Your own personal claims specialist

If you or your family need to make a claim, we’ll assign you a dedicated claims specialist to look after everything. No need to explain things to multiple people.

We’ll keep your premiums manageable

Unlike some life insurance policies, your annual premium increase won’t be based on your age which will help with budgeting later in life. Plus, we offer lower starting premiums for non-smokers.

Cover for when you need it most

We know that the older you get, the more you have to protect. That’s why our cover is designed for people aged 45 to 79, protecting you and your family for the next 20 years or until you turn 85 – whichever comes first.

How to get life insurance

If you’re a New Zealand resident aged 45 to 79, the process is quite simple:

  1. 1 Request a quote

    Answer eight questions about your health and we’ll get you a quote in minutes.

  2. 2 Choose your cover

    Tailor your policy and choose the level of cover you need.

  3. 3 Get covered

    Rest easy knowing the people you care about most are in safe hands.

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Everything you need to know about life insurance

        1. Terminal illness with diagnosis of 12 months or less to live.

How can we help?

To find out more about New Zealand Seniors,
speak to one of our friendly insurance specialists now