New Zealand insurers, along with their Australian counterparts, have arrived at a strange place: mainly rate-for-age insurance is sold. Combined with the requirement to model the 'ideal' package, results in insurance policies that cost 10-15% of all household income. The fact that they are rate-for-age means that for clients in their 40s premiums will increase at 12% to 14% per year plus inflation. This isn't ideal. It most cases it isn't even logical, it doesn't help clients buy meaningful cover, and even if they do buy - it isn't sustainable.
Sure, there are exceptions. Affordability questions may be swept aside by a determined buyer, prioritising cover over other expenditure. Sometimes there may be a temporary fall in income, and while current affordability may look suspect, future affordability, for reasons not clear to us, will be fine. But these are the exceptions. On average, the incomes of people in their 40s will rise by 2-3% per year, not 12-14%. It is hard not to see this as lapse generation proposition.