Life Insurance in New Zealand
Life insurance pays a tax-free lump sum to the people you nominate if you die, or are diagnosed as terminally ill. It is the simplest way to make sure your family can stay in their home and keep their lifestyle when you are no longer there to provide.
What is life insurance?
A life insurance policy is an agreement between you and an insurer: you pay a regular premium, and in return the insurer pays an agreed sum (the “sum insured”) to your chosen beneficiaries when you pass away. Life cover is not compulsory in New Zealand, and ACC does not pay out for death by illness, so for most families private life insurance is the main safety net.
What it can cover
Who it’s for
- Anyone with a mortgage or other debt they would not want passed to their family
- Parents and caregivers whose income supports children or dependants
- A main income earner in a household, or both partners in a two-income home
- Business owners with personal guarantees on business borrowing
What to think about
How much cover you need depends on your mortgage, other debts, your family’s living costs and how long you would want them supported. An adviser can model this with you, compare insurers, and explain optional extras such as trauma or total and permanent disability cover that can sit alongside a life policy.
Stepped vs level premiums
Two common ways to structure life cover. An adviser can compare both against your budget and how long you need cover.
| Stepped premiums | Level premiums | |
|---|---|---|
| Cost early on | Lower to start | Higher to start |
| Cost as you age | Rises each year | Stays the same |
| Best suited to | Shorter-to-medium-term needs | Long-term cover |
| Total cost over time | Usually more long term | Often less long term |
Frequently asked questions
How much life insurance do I need?
Is a life insurance payout taxed in New Zealand?
Does life insurance cover any cause of death?
Will my premiums change over time?
Related cover
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