Life Insurance
Most New Zealanders have some form of life insurance, but most don't have enough. Learn how to calculate the right life insurance cover for your family, understand term vs whole life policies, and discover what to watch for when making claims.
What you need to know
At Gerrards, we compare policies across 30+ insurers to show you what different providers are actually offering — not just on premium, but on exclusions, claim history, policy features, and how they've treated policyholders at claim time. We audit policies annually because circumstances change, and we're available seven days a week, 8am to 7pm for same-day quotes.
How this protects you
Lump sum payment to beneficiaries upon death or terminal illness diagnosis
Coverage for funeral costs, typically $8,000-$15,000 in New Zealand
Ability to clear mortgage and debts immediately without financial stress
Income replacement during critical years while children grow up
Funding for children's education and future planned expenses
Time for family to grieve without immediate financial panic
Years of experience
Clients protected
5-star reviews
What's covered
Life insurance pays a lump sum to your beneficiaries when you die — or in most New Zealand policies, when you're diagnosed with a terminal illness. Your family receives a single payment to clear the mortgage, cover living costs, fund the kids' education, and pay funeral bills (typically $8,000-$15,000 in NZ). The lump sum buys your family time to grieve without panicking about immediate financial obligations.
Beyond the core death benefit, most comprehensive policies include additional support services. These often encompass grief counselling for family members, financial planning support to help beneficiaries manage the payout effectively, and premium waiver provisions if you become totally and permanently disabled before death. Some insurers also provide accelerated payment options for terminal illness diagnoses, allowing you to access funds for medical care or final wishes.
The policy remains in force as long as premiums are paid, with many term policies offering guaranteed renewal options. Coverage typically extends to death from any cause after the initial waiting period (usually two years for suicide), natural causes, accidents, and terminal illness. Beneficiaries nominate who receives the payout, ensuring funds go directly to those who need them most without unnecessary delays.
Why you need this
Data from the Financial Services Council consistently shows most New Zealanders are significantly underinsured. Circumstances change — a bigger mortgage, another child, a new business venture — and the cover you took out five years ago may bear no resemblance to what your family would actually need today. Without adequate coverage, your family would need to find money for funeral costs, mortgage payments, and everyday living expenses in the week after losing you.
Life insurance isn't just about the big stuff — it buys your family time to grieve without simultaneously panicking about the rent or mortgage. Consider the reality: if you're the primary income earner and you die unexpectedly, your partner needs to manage funeral arrangements, support grieving children, handle your estate, and potentially return to work or increase working hours — all while processing their own grief. Adequate life insurance removes the financial pressure from this impossible situation.
For business owners with partners, life insurance provides essential capital to buy out a deceased partner's share and keep the business running, preventing forced sales or business collapse. Families with young children face particularly high exposure — the younger your kids, the more years of income you need to replace and the higher your education funding obligations. Even if you have some cover through your employer, this typically disappears when you leave the job and is rarely sufficient for your family's actual needs.
How to Calculate How Much Cover You Need
Work through your actual numbers instead of guessing or buying whatever sounds big — this method provides a reliable foundation for determining your coverage gap
Clear your debts immediately
Add up what's owed: your mortgage, any personal loans, credit cards, and outstanding debts. If you have a $400,000 mortgage and $20,000 in other debts, that's $420,000 your family would need to clear on day one.
Replace your income for the years that matter
How much would your household need per month without your income, and for how long? If your family needs $5,000 monthly for ten years while kids grow up and your partner adjusts, that's $600,000 in income replacement alone.
Factor in future costs you're planning for
University in New Zealand costs tens of thousands per year according to Universities New Zealand. If you have two children you intend to support through tertiary education, factor in realistic costs for their futures.
Subtract what you already have
Deduct your savings, KiwiSaver balance, existing life policies, and any assets your family could realistically liquidate without hardship. What's left is your coverage gap — the amount of additional insurance you need.
Pricing factors
Life insurance premiums vary based on several key factors:
- Policy type - Term life insurance offers affordable premiums for a defined period (typically 10, 20, or 30 years), while whole life insurance has significantly higher premiums but covers you for your entire life with potential cash value accumulation
- Age - Premiums increase with age, so locking in cover while you're younger typically results in better long-term value
- Health status - Pre-existing medical conditions, family health history, and current health metrics (blood pressure, cholesterol, BMI) all impact pricing
- Lifestyle factors - Smoking status, alcohol consumption, and participation in high-risk activities can increase premiums substantially
- Occupation - High-risk occupations (construction, commercial fishing, aviation) typically attract higher premiums than office-based roles
- Coverage amount - Higher sum insured amounts increase premiums proportionally, though the per-dollar cost often decreases at higher coverage levels
- Policy features - Optional riders like trauma cover, income protection additions, or premium waiver benefits increase the overall cost but provide broader protection
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Related FAQs
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Get Your Life Insurance Right
Start with the numbers, then find a broker who'll tell you what you actually need — not just what's easiest to sell
