Insurance customer faces 670 percent premium increase

Snowballing cost of Gisborne man's premium has become hard pill to swallow.

Snowballing cost of Gisborne man's premium has become hard pill to swallow.

IT’S INCREASED BY HOW MUCH?: It certainly was an eyebrow raising moment when Age Concern Trustee Kath Allen realised how much Teira Pokai’s life insurance premiums had increased by: 670 percent over 15 years. Mr Pokai, 72, now has to pay $175.06 a month for a life policy he took out 15 years ago when it was only $22.70 a month. Picture by Paul Rickard.

WHEN Gisborne man Teira Pokai was 57 he took out a life insurance policy for $30,000. That was 15 years ago and premiums were $22.70 a month.

Today those premiums are $175.06 a month, a 670 percent increase.

Now at 72, Mr Pokai is not sure what to do, cancel the policy after all those years of paying for it, or struggle to maintain the monthly premiums.

His policy has also increased to $41,000 payable on death to keep up the with inflation.

Mr Pokai wants to raise awareness about this issue because he knows there will be many others out there in his predicament.

It is common for life insurance premiums to increase with age but there are options at the start of a policy to factor in these increases. It might mean a bigger premium at the start but at least it means you can budget into the future without any nasty surprises, like an increase of 670 percent when you are on the pension.

While dying is guaranteed, it is not cheap and the rising cost of funerals can place a burden on families during a time of grief.

“My aim when I kicked the bucket was that there would be enough money to cover everything like the funeral, any debts outstanding and have a little left for the children.

“I wanted to do it all by myself, it was a pride thing, but I now realise I can’t.”

Fixed income

Mr Pokai receives the pension so is on a small fixed income, and he says there is only one place the extra money for life insurance can come from, his food budget.

He receives around $350 a week from superannuation, out of which has to come the mortgage, rates, power, everything. He goes to a budget advisor regularly, who he credits with getting him back on track money wise.

“I’ve been lucky I’ve had help from people."

After speaking to Age Concern CEO Frances Toroa, it was suggested that maybe Mr Pokai’s family might help him with the monthly premiums rather than cancel the whole policy.

“I’ve been speaking to people, and my children about it as they are the ones who will benefit from it in the end.

“My kids could help but I did not think it was fair on them but I will leave the decision to them.”

Asteron Life, who Mr Pokai took his policy out with is an intermediated life insurer.

They don’t sell directly to customers but instead work with registered advisers who give customers advice about what is best for them.

An Asteron Life spokesperson said they had taken a look at Mr Pokai’s cover and identified some solutions that could help make his cover more affordable.

Mr Pokai said these included a reduced amount of cover, which went against what he was trying to do.

The Asteron Life spokesperson said Mr Pokai was in discussions with his financial adviser.

“So we’ll be in touch with that adviser and Mr Pokai to see if we can help in any way. We care about our customers, and we’re committed to making sure that insurance is as affordable as possible for people who want to retain it as they get older.

"Asteron Life offers different premium structures to help; stepped premiums that increase over time with age, and level premiums where you pay more up front but your premiums don’t increase over time due to increasing age.”

WHEN Gisborne man Teira Pokai was 57 he took out a life insurance policy for $30,000. That was 15 years ago and premiums were $22.70 a month.

Today those premiums are $175.06 a month, a 670 percent increase.

Now at 72, Mr Pokai is not sure what to do, cancel the policy after all those years of paying for it, or struggle to maintain the monthly premiums.

His policy has also increased to $41,000 payable on death to keep up the with inflation.

Mr Pokai wants to raise awareness about this issue because he knows there will be many others out there in his predicament.

It is common for life insurance premiums to increase with age but there are options at the start of a policy to factor in these increases. It might mean a bigger premium at the start but at least it means you can budget into the future without any nasty surprises, like an increase of 670 percent when you are on the pension.

While dying is guaranteed, it is not cheap and the rising cost of funerals can place a burden on families during a time of grief.

“My aim when I kicked the bucket was that there would be enough money to cover everything like the funeral, any debts outstanding and have a little left for the children.

“I wanted to do it all by myself, it was a pride thing, but I now realise I can’t.”

Fixed income

Mr Pokai receives the pension so is on a small fixed income, and he says there is only one place the extra money for life insurance can come from, his food budget.

He receives around $350 a week from superannuation, out of which has to come the mortgage, rates, power, everything. He goes to a budget advisor regularly, who he credits with getting him back on track money wise.

“I’ve been lucky I’ve had help from people."

After speaking to Age Concern CEO Frances Toroa, it was suggested that maybe Mr Pokai’s family might help him with the monthly premiums rather than cancel the whole policy.

“I’ve been speaking to people, and my children about it as they are the ones who will benefit from it in the end.

“My kids could help but I did not think it was fair on them but I will leave the decision to them.”

Asteron Life, who Mr Pokai took his policy out with is an intermediated life insurer.

They don’t sell directly to customers but instead work with registered advisers who give customers advice about what is best for them.

An Asteron Life spokesperson said they had taken a look at Mr Pokai’s cover and identified some solutions that could help make his cover more affordable.

Mr Pokai said these included a reduced amount of cover, which went against what he was trying to do.

The Asteron Life spokesperson said Mr Pokai was in discussions with his financial adviser.

“So we’ll be in touch with that adviser and Mr Pokai to see if we can help in any way. We care about our customers, and we’re committed to making sure that insurance is as affordable as possible for people who want to retain it as they get older.

"Asteron Life offers different premium structures to help; stepped premiums that increase over time with age, and level premiums where you pay more up front but your premiums don’t increase over time due to increasing age.”

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Ian Parker, Tauranga - 7 months ago
I have also had increased premiums on a policy taken out in 1992 with the latest increase being 40 percent and the sum insured is NOT inflation-adjusted!!

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