Written by · Reviewed by Smiths Insurance & KiwiSaver — licensed Financial Advice Provider (FSP712931) · Last updated 2026-10-20

Is life insurance required to get a mortgage in NZ?

We found no New Zealand law that makes life insurance a condition of a home loan, and the one bank insurance page we checked (ANZ) does not list it as one. Your loan offer sets your lender's conditions, so read it. The loan does not end if a borrower dies: debts in your name are paid from your estate, and a co-owner or family may have to deal with the house.

In short

What lenders can require, and what the law says

Credit-related insurance, in the Credit Contracts and Consumer Finance Act 2003, means insurance over secured property or leased goods, cover for a shortfall if that property is destroyed, or "consumer credit insurance". Consumer credit insurance is cover in the event of the insured's disability or death, or sickness, injury or unemployment, "if the liability of the insurer is to be determined by reference to the liability of the insured under a credit contract" (CCCFA). In plain words, it is cover whose payout tracks what you owe the lender.

The Act then does three things. A creditor "must not make any unreasonable requirement" about the terms on which you take out credit-related insurance (s 69). A lender that arranges insurance, including by receiving a commission, must make reasonable inquiries to be satisfied it is likely to meet the borrower's requirements and objectives (s 9C(5)). And it must give you a copy of the insurance terms before the insurance is arranged (s 70). We searched the Act for a rule that a borrower must hold life insurance and found none. That is not a promise about every lender: conditions are written into your loan documents and offer. ANZ's insurance page says insurance "could be a good idea" in several situations, one being that you have a home loan (ANZ).

What happens to the loan if a borrower dies

The loan stays. The estate is the pool of assets that pays a person's debts (Administration Act 1969, s 26), and, as between those claiming through the deceased, property charged with a debt such as a mortgage is primarily liable for it (s 34) (Administration Act). If a house is owned as joint tenants, Community Law says the other partner "becomes the sole owner of the house as soon as the deceased died", and a lawyer is needed to transfer the title (Community Law). Nothing in those sources cancels the debt when someone dies. How your own lender treats a co-borrower's death is in your loan agreement, so ask the lender.

Life insurance proceeds are part of the estate only if they are payable to the estate (Community Law). Quick Life pays the policy owner or the nominated beneficiary, and if none is named, the owner or their estate, so who you name matters. See life insurance beneficiaries.

Three products called mortgage insurance

Cover What it pays Who it suits
Life cover A lump sum if the life insured dies or is diagnosed with a terminal illness, to whoever is named Anyone whose death would leave a debt or dependants
Mortgage repayment cover (also called mortgage protection) A monthly amount towards mortgage repayments if you cannot work through sickness or injury. Fidelity describes it as "a monthly amount to help cover the life insured's mortgage repayments" if disabled People who rely on their income to service the loan
Loan-linked insurance arranged by the lender Whatever the insurer promises, with the payout tied to the loan Check the terms first; the Act's disclosure and inquiry duties apply

Mortgage repayment cover is a disability product. It does not pay if you die. Sorted lists "mortgage protection insurance, which covers your mortgage if you can't work" among health-related policies (Sorted; Fidelity). For the difference in detail, see life insurance versus mortgage protection and mortgage life insurance in NZ.

How much cover? A worked example

The numbers below are round, labelled examples. They are not a quote or a recommendation, and your figures will differ.

Item Example amount
Mortgage balance $500,000
Other debts (car loan, cards) $20,000
A funeral (FDANZ average, cremation, 50 guests: $11,700) about $12,000
Three years of household costs while a partner adjusts, at $60,000 a year $180,000
Total about $712,000

Then take off what already exists: a partner's income, savings, and any cover you already hold. Compare the result with product limits. Momentum's Quick Life covers $50,000 to $300,000 per person, rising by 3% a year to a $500,000 cap per person; it cannot match this example alone. AIA's Living cover is listed as unlimited, and Chubb's Assurance Extra has no maximum sum from age 16 (AIA; Chubb). FDANZ's 2026 report gives the funeral figure (FDANZ). Use the life insurance calculator or the mortgage protection calculator to test your own numbers, and read how much life insurance you need.

What a mortgage-sized policy costs

These are indicative monthly costs from insurers' published rate cards as at 8 September 2026, for $500,000 of stepped life cover, non-smoker, occupation class 1, standard rates with no loadings or exclusions. They are ranges across the insurers priced, rounded outward, not an offer. Your own premium depends on underwriting.

Age Man, typical monthly cost Woman, typical monthly cost
30 $30 to $40 $20 to $30
40 $40 to $50 $35 to $40
50 $90 to $120 $80 to $100

Momentum priced only $250,000, so it is not in these ranges. See QuoteHub's Premium Index method, the life insurance rates, and an insurer's own page such as Fidelity Life. Stepped premiums rise each year with age, and the FMA says cover that is cheaper at first can cost more over time (FMA).

Who should weigh it up

Your situation What to look at
Someone else is on the loan or depends on your income Life cover sized to the debts and the years of support they would need
You are the only borrower and nobody depends on you The debt is met from your estate; consider whether the house and savings cover it
You have a health condition and cannot get standard terms Guaranteed acceptance cover, with its limits (below)
You rely on your wage to meet repayments Mortgage repayment cover for disability, a separate product

If standard cover is out of reach

Momentum's Quick Life accepts ages 18 to 65 with no health questions. For the first 2 years it excludes pre-existing conditions and suicide, so it would not pay on a death from a condition you already had. Some exclusions apply at any time: the wording lists alcohol or drug effects, war, terrorism, criminal activity, and dangerous jobs or pastimes. After 2 years it covers pre-existing conditions, "except some specific conditions" that can be excluded in your policy. It pays on terminal illness expected to cause death within 12 months. See guaranteed acceptance mortgage cover and the guaranteed acceptance hub.

Momentum Life Limited has an A.M. Best financial strength rating of B (Fair), affirmed on 11 February 2026; see its financial strength page. Momentum's Funeral Insurance (ages 40 to 75, $3,000 to $30,000) pays only for accidental death in its first 24 months and is not mortgage cover. Compared on this page: life cover, mortgage repayment cover and loan-linked cover, on payout and limits, as at 20 October 2026, from the sources listed. This is one adviser's reading, not a score, and not every insurer is included. The buttons on this page open Momentum's own application.

Frequently asked questions

Do banks require life insurance for a home loan?

We found no law that lists it as a condition, and the one bank insurance page we checked (ANZ) does not either. Read your loan offer and ask the lender in writing.

Can life insurance pay off my mortgage?

A life policy pays a lump sum to the owner or nominated beneficiary, who can use it to repay the loan. The lender is not paid automatically unless the cover is loan-linked.

Is mortgage protection the same as life insurance?

No. Mortgage repayment cover pays monthly if you cannot work. Life cover pays on death or terminal illness.

What if my partner and I share the mortgage?

On a joint Quick Life application each person is covered in their own right, and a payout for one leaves the other covered. Other insurers also name each person as a separate life assured.

Financial advice is provided by Craig Smith Business Services Limited, trading as Smiths Insurance & KiwiSaver, a licensed Financial Advice Provider (FSP712931). This page is general information, not advice. QuoteHub is a Momentum Life partner, and Smiths Insurance & KiwiSaver may receive a commission if you buy through our link; see our disclosure and how we are paid. Written by the QuoteHub Editorial Team from the sources below; last reviewed 20 October 2026.

References

Read the full insurance guides

Compare your cover with a licensed NZ adviser · free, no obligation.

Start your free comparison

Compare panel options first. A licensed NZ adviser can then review existing cover or help with an application.

Free, no obligation. Licensed NZ advisers · Craig Smith Business Services Ltd, FAP FSP712931.

Explore related pages: Life Insurance, Income Protection, Health Insurance, Trauma Insurance, How It Works.