Money & Travel

Product overview

Welcome to New Zealand's trusted, independent source of practical information. We provide recommendations on products and trusted businesses, exclusive deals and consumer advice. 

Life insurance

13mar life insurance hero default

Save on life insurance premiums.

If people depend on you for income or care, you need life insurance. Choosing the right amount and buying from the right company can save you a lot of money. We've looked at "term life" policies, and asked 21 companies to provide quotes for our 2 case studies.

Compare Life insurance

View all

Do you need it?

Most people with a family or debt need some life insurance – just in case the unthinkable happens.

At a minimum, life insurance should cover your debts, funeral expenses, full repayment of your mortgage (including any early-repayment fee), and your family's immediate living costs.

As well, you should add in the amount required to replace a lost income, or pay for a caregiver, until the surviving family is no longer dependent on this.

For this type of “pure” life insurance, we recommend term policies. Term life-insurance policies pay out the sum insured if you die while the policy is in force. You buy the cover for the period that you need it, which for most people is until their children are independent and their home is mortgage free.

We don’t recommend whole-of-life or investment-type insurance policies for pure life insurance. Both these are commission-based products that combine life insurance with a savings plan; and because they’re commission-based, they’re likely to be more expensive. You’re better off getting the best term life insurance you can afford and then looking for the best savings or investment deals.

Who are your dependants?
Life insurance isn't just for financial dependency. Consider the ways that you contribute to your family, and what you'd need to compensate for the loss of that contribution. This includes caregiving and childcare as well as financial support. It could also include the support you give to elderly relatives.

Assessing your risk

When they take you on, companies look at what sort of risk you are.

The premium you pay can be affected by your age, sex, occupation, lifestyle activities, and health factors such as body mass index (BMI) and medical history – and whether you smoke.

Men pay a higher premium in their 20s because they have a higher risk of accidents then. Premiums also increase as you approach middle age.

Make sure you realise what you’re getting into when you sign up. Depending on your circumstances, there could be policy exclusions or a higher premium to cover risks that are not part of the policy’s “standard” cover.

One insurer told us the number of applicants being refused life insurance on medical grounds was increasing but there are some products available which don’t require a medical. These tend to be more expensive and have limited cover.

When you apply

Always provide the full info: When you apply you must answer all questions honestly and in full, particularly the questions about your medical history. If you don’t, the insurer may refuse to pay out later. Cover for pre-existing conditions varies, so it may be worth paying higher premiums to get suitable cover.

Ask your adviser: Read the whole policy document carefully. If there is anything you don't understand, ask the company or your adviser to explain it.

Buying cover

There are many ways of buying cover - through brokers, financial advisers, over the phone and in person at banks and insurance centres.

You need to be a Gold or Silver member to view this content.

Variations in cover

The main reason for life insurance is to provide a lump-sum payment when you die or are terminally ill.

You need to be a Gold or Silver member to view this content.

Paying the premium

Most people pay their insurance monthly or fortnightly rather than annually. This means paying smaller amounts more often.

You need to be a Gold or Silver member to view this content.

Comparing policies

We asked 21 life insurance companies to provide monthly quotes for term policies with a lump-sum payout for our fictional couples.

You need to be a Gold or Silver member to view this content.

Couple in their 20s

Young couple Josh (29) and Kara (27) own a house with a mortgage.

Should either Josh or Kara die, they’d need to cover basic funeral expenses ($10,000) and pay off their mortgage. They’d also need an income to support the remaining person.

Upgrade to a Gold or Silver membership to view our table of premiums.

Couple in their 40s

Craig (49) is an accountant and Sharon (47) is a receptionist.

Both are non-smokers and in good health. They have 2 teenagers. If either Craig or Sharon died, the remaining family would need to pay off all debts plus the funeral expenses and then have enough income to support them for at least 5 years.

Upgrade to a Gold or Silver membership to view our table of premiums.

Life insurance calculator

Our advice

Here's our advice for before and after you have life insurance:

  • Shopping for cover: Get at least 3 quotes. Premiums can differ by hundreds of dollars. Ensure any pre-existing medical conditions are covered.
  • Ask your financial adviser if there's anything you're unsure about, and get them to explain it to you. Make sure you do this before you sign.
  • When you have insurance: Keep the policy in a safe place - where your will is kept, or with your lawyer - and let your partner or family members know about it.
  • Every few years, review how much cover you need, particularly after major life changes such as marriage or divorce, having children, or children leaving home and becoming independent.
  • If you are changing insurers, don't cancel your old cover until you have been confirmed as a customer of the new insurer.

Related articles

×