How Much Life Insurance Do I Need? (NZ Guide)
There’s no single right number for life insurance — it depends on your debts, your income and who relies on you. This guide walks through a simple way to estimate the cover your family would actually need.
Start with what would need to be paid off
The most common starting point is your mortgage. For most New Zealand families, clearing the home loan is the single biggest thing life insurance is used for — it means your family can stay in the house without the pressure of repayments.
Add any other debts you wouldn’t want left behind: personal loans, car finance, credit cards, and any business borrowing you’ve personally guaranteed.
Add income your family would lose
Think about how many years your household would need support if your income stopped, and roughly what that income covers each year. A common approach is to multiply your annual contribution to the household by the number of years your dependants would need it — for example, until the youngest child is financially independent.
This is the part people most often under-estimate. Clearing the mortgage helps, but day-to-day living costs continue.
Factor in one-off and future costs
Include funeral costs and a buffer for the immediate months after a loss. Some families also add an amount for children’s education or future childcare so those plans aren’t derailed.
Subtract what you already have
Take off any existing cover, meaningful savings, and any group life cover you may have through KiwiSaver providers or an employer. What’s left is a rough guide to the gap a new policy would fill.