Roger Pettigrew* remembers only too well the feeling of relief that washed over him once he had recovered from the anguish of his wife's death.
Relief because the life insurance policy he had taken out meant that tragedy would not be accompanied by its evil twin – trauma, stemming from the financial and mental pressures that can accrue when a loved one dies, leaving their partner with, typically, children and a mortgage.
Pettigrew (not his real name) had taken out policies on himself and wife Susan only about five years before cancer struck Susan. Their children were aged seven and five – while the mortgage involved some figures of significantly higher numbers.
"We took it [life insurance] out when the kids were small and we had a sizeable mortgage on the house. Neither of us wanted to leave that burden should anything happen to one of us.
"It meant several things," says Pettigrew, of Auckland. "Financially, it meant the mortgage could be cleared, a huge load lifted. But it also meant I had the time to stay home with the kids and help them through that harrowing time after their mum died; it was great to be able to stay at home with them, look after their needs and help get them back on course."
Pettigrew stayed at home for six months until he felt his children were ready for him to go back to work. A civil engineer, he scored a new job but also needed new arrangements to be made on the home front.
"I was a single parent," he says, "so I had that difficulty all single parents have – how to look after the kids when you are at work. My parents lived nearby but they couldn't look after the kids every day when they came back from school."
His life insurance payout enabled him to pay for an au pair – a woman who would be at home when the kids arrived from school and who would prepare the evening meal before heading off when Pettigrew came home.
"That was good," says Pettigrew, "but the benefit I remember most from the insurance was being able to be with our kids for that six months. It was so important for me to be there and to help them keep on an even keel."
That same motivation of looking after the kids is spurring single mother Jeanine Taylor*, also of Auckland, to research life insurance to protect her 17-year-old daughter.
"I'm 40 now and, if something happens to me, she'll be left on her own. Her father isn't around and he doesn't do anything for her – so I am considering life insurance as a way of protecting her."
They are renting and so don't have a mortgage to consider; Taylor says she is looking for a policy which can meet their needs: "We will need something which fits our circumstances. It won't necessarily be the lowest price – but something which enables me to secure that future for my daughter if something goes wrong."
So why is New Zealand so underinsured when it comes to life insurance? Figures from the Reserve Bank in 2017 show New Zealand as the seventh-lowest in the OECD when it comes to life insurance penetration – with only Greece, Mexico, Estonia, Lithuania, Latvia, Turkey and Iceland behind us.
The major reasons for not taking out life insurance, according to a Financial Services Council report from 2019 are, in order: cost (not being able to afford the premium), lack of priority and a perception that it does not represent value for money.
"My parents didn't think it was value for money," says mother-of-two Flora Sandmin*, also from Auckland. "They saw it as paying out a whole lot of money for no return. But my husband and I have kids and a mortgage; we simply didn't want to take the risk."
Communications technician Peter Stone* can understand cost being a factor for some – but can't quite conceive of how people rank life insurance as a low priority or don't see it as value for money. The Aucklander battled liver and bowel cancer for two years before earning full remission but says his fight was made easier by the knowledge he and his family were covered.
"I'd say to anyone who is considering life insurance that they should do it. Try not knowing whether you are going to live or die for a while – that makes it feel like really good value for money and a really high priority.
"I knew that, if things didn't turn out as I hoped, my wife and daughters would have $800,000 to fall back on. It's only money, sure, and not a husband or father – but at least they would not have had to endure hardship on top of tragedy."
*The names have all been changed to protect privacy.
This article is sponsored by Momentum Life. All case studies mentioned in this article were sourced by NZ Herald and are not Momentum Life customers. You should seek independent financial advice, if required, to ensure the suitability of any financial products for you.