Written by Henry Smith · Reviewed by Smiths Insurance & KiwiSaver — licensed Financial Advice Provider (FSP712931) · Last updated 2026-09-17

Group Life and Income Protection for NZ Employers: Minimum Size

A New Zealand employer can set up a group scheme covering life, trauma and income protection for staff, and most insurers require at least ten employees to qualify, including Chubb Life, Fidelity Life and Asteron Life. Schemes accept every eligible employee up to an automatic acceptance limit with no medical questions, priced at roughly 1 to 3 percent of total salary cost rather than underwritten person by person. Life and trauma benefits typically pay a tax-free lump sum, while an employer-funded income protection benefit is usually taxable to the employee, and cover normally ends on an employee's last working day unless the scheme has a continuation option. A licensed adviser can quote a scheme against a specific staff list and confirm which benefits and terms actually apply.

In short

• Chubb Life, Fidelity Life and Asteron Life each require a minimum of ten employees to start a group life, trauma or income protection scheme (Chubb Life, Group Insurance; Fidelity Life, Group insurance for employees; Asteron Life, Employee Insurance).
• Chubb Life prices a group scheme at around 1 to 3 percent of total salary cost, and Asteron Life at around 1 percent (Chubb Life, Group Insurance; Asteron Life, Employee Insurance).
• Fidelity Life's Group Income Protection policy wording sets a minimum of ten lives insured under the policy at its start date, unless the schedule states otherwise (Fidelity Life, Group Income Protection policy wording).
• Group Life, Death and Disablement premiums totalled $202 million and Group Trauma a further $13 million of New Zealand's $3.26 billion annual life insurance premium pool, in the Financial Services Council's quarterly snapshot as at 30 September 2025 (Financial Services Council, Spotlight on Life Insurance, quarterly snapshot as at 30 September 2025).

Group risk cover is one of the simpler employee benefits for a New Zealand business to set up, because the insurer underwrites the group rather than each person, accepting every eligible employee up to a pre-agreed limit with no health questions. This guide covers the minimum group sizes insurers publish, how that limit works, what a scheme typically pays, how it is taxed, and what happens when someone leaves.

How many employees does a NZ employer need for a group scheme?

Most NZ group risk insurers set the floor at ten employees. Chubb Life requires "at least 10 employees" for its Life, TPD, Trauma and Income Protection range (Chubb Life, Group Insurance); Fidelity Life's own income protection wording sets "a minimum of ten lives insured...at the start date" (Fidelity Life, Group Income Protection policy wording); and Asteron Life sets the same floor, "10 or more employees" (Asteron Life, Employee Insurance). AIA publishes no fixed minimum, marketing schemes from "10 people to 10,000" (AIA, Corporate Solutions); we found no published scheme on the Partners Life site.

How are group schemes priced and underwritten?

Group schemes are priced as a share of payroll, not person by person. Chubb Life expects "around 1-3% of your total salary cost," and Asteron Life "usually around 1%" (Chubb Life, Group Insurance; Asteron Life, Employee Insurance). The rate depends on the group's age, gender mix and occupation risk, so neither publishes one rate card the way individual life insurance is priced.

For comparison, an individual buying $500,000 of standalone life cover pays a premium set purely by age, based on indicative standard rates from insurers' published rate cards as at 8 September 2026 (QuoteHub Premium Index).

Indicative monthly cost, $500,000 Life cover, male non-smoker, occupation class 1, from insurers' published rate cards as at 8 September 2026 (see AIA, Fidelity Life and Asteron Life for three insurers' own published rates), via the QuoteHub Premium Index. Group premiums are priced as a share of payroll, so the figures are not directly comparable.

What is an automatic acceptance limit?

An Automatic Acceptance Limit, or AAL, is the cover every eligible employee gets with no medical questions. Fidelity Life calls it "a pre-approved level of cover, per product" (Fidelity Life, Group Trauma insurance); Chubb Life, "a pre-approved level of cover that's been determined for the group" (Chubb Life, Group Insurance). Asteron Life's policy document confirms it is scheme-specific, "the amount stated in the Policy Schedule," not one published figure (Asteron Life, Employee Insurance policy document). Cover above the AAL generally needs full individual underwriting. Fidelity Life's automatic acceptance runs from age 16 to 65, Life continuing to age 70 (extendable to 75) and Income Protection to 65 (extendable to 70) (Fidelity Life, Group insurance for employees; Fidelity Life, Group Income Protection).

What do employees actually get?

Insurers bundle similar benefits: life cover with a funeral advance, trauma cover against a defined condition list, TPD, and income protection paying a share of salary, though detail differs by insurer.

Asteron Life also adds a Specific Injury Support Benefit and Kids Cover ($5,000), and reports accepting 97.7% of claims and paying $117.9 million to customers between July 2024 and June 2025 (Asteron Life, Employee Insurance).

How is group cover taxed for employers and employees?

Group life and trauma premiums an employer pays are generally subject to Fringe Benefit Tax, while employer-paid income protection premiums can be exempt if the resulting claim would itself be taxable to the employee. Inland Revenue confirms an employer "will generally be entitled to a deduction for the premiums paid" and that group premiums are "subject to fringe benefit tax" (Inland Revenue, QB 17/10), but its guidance on employer-paid sickness and accident cover carves out income protection where the employer is liable for the premium "and a claim payment under the insurance policy would be assessable income of the employee" (Inland Revenue, QB 18/05). A death benefit lump sum is not taxable to the employee or their estate (Inland Revenue, QB 18/03), while an income protection claim is generally assessable under section CE 11, because it replaces earnings (Inland Revenue, QB 18/05).

Confirm the current position with the employer's accountant or Inland Revenue, since FBT rules are reviewed periodically.

What happens to cover when someone leaves?

Group life, trauma and income protection cover normally ends on an employee's last working day, because the employer owns the policy. Some schemes include a continuation option letting a departing employee convert to an individual policy with the same insurer, without new health questions, inside a short deadline: AIA's option must reach AIA within 60 days, and Asteron Life gives 60 days of free extended cover before it lapses (AIA, Continuation Options Adviser FAQ; Asteron Life, Employee Insurance policy document). Fidelity Life confirms employees "may be able to continue their cover directly with us when they move to a new employer" (Fidelity Life, Group Life insurance).

The new premium is set at the insurer's individual rate, not the group rate. Our guide to continuation options covers the deadlines and cost, and our guides to group versus individual cover and employer cover versus your own policy set out when a personal top-up is worth adding. Group cover also sits alongside other business protection tools such as key person insurance, which protects the business rather than the employee's family.

Frequently Asked Questions

How many employees does a business need to start a group life insurance scheme in NZ?

Ten employees: Chubb Life, Fidelity Life and Asteron Life each set that floor (Chubb Life, Group Insurance; Fidelity Life, Group insurance for employees; Asteron Life, Employee Insurance). AIA does not publish a fixed minimum.

What is an automatic acceptance limit?

The cover every eligible employee gets with no medical questions, set per scheme rather than as one market-wide figure (Fidelity Life, Group Trauma insurance; Asteron Life, Employee Insurance policy document).

Does group income protection pay the same as an individual policy?

The structure is set by the scheme. Fidelity Life's group income protection pays up to 75% of usual income, the same ceiling most individual income protection policies use, though the employer chooses the amount and periods for the whole group (Fidelity Life, Group Income Protection).

Is a group income protection payout taxed?

Generally yes. Inland Revenue treats an income protection claim as assessable income under section CE 11, whether held individually or through a group scheme, because it replaces earnings (Inland Revenue, QB 18/05).

What happens to cover if an employee goes on parental leave?

Fidelity Life keeps cover in place during parental or other approved unpaid leave, for up to two years in some cases, subject to the policy's terms (Fidelity Life, Group Life insurance).

Can a small business with fewer than 10 staff still get group cover?

Not through the standard schemes here: Chubb Life, Fidelity Life and Asteron Life all publish a ten-employee floor (Chubb Life, Group Insurance; Fidelity Life, Group insurance for employees; Asteron Life, Employee Insurance). A licensed adviser can confirm whether an insurer will make an exception.

Talk to a Licensed Adviser

A licensed adviser can request quotes from a panel of insurers including AIA, Asteron Life, Fidelity Life and Chubb Life against your actual staff list, confirm each scheme's automatic acceptance limit and continuation terms, and set out the fringe benefit tax position before you commit, with no obligation to proceed. Start a cover check with QuoteHub's licensed advisers, or read more on our business protection hub.

References

• Chubb Life, Group Insurance
• Fidelity Life, Group insurance for employees
• Fidelity Life, Group Life insurance
• Fidelity Life, Group Income Protection
• Fidelity Life, Group Trauma insurance
• Fidelity Life, Group Income Protection policy wording
• Asteron Life, Employee Insurance
• Asteron Life, Employee Insurance policy document
• AIA, Corporate Solutions
• AIA, Corporate Solutions Life Cover
• AIA, Corporate Solutions Income Protection
• AIA, Continuation Options Adviser FAQ
• Inland Revenue, QB 17/10
• Inland Revenue, QB 18/03
• Inland Revenue, QB 18/05
• Financial Services Council, Spotlight on Life Insurance, quarterly snapshot as at 30 September 2025

Disclaimer: This article is for informational purposes only and does not constitute financial advice. QuoteHub connects New Zealanders with licensed financial advisers. Our Financial Services Provider (FSP) number is 712931. Always seek personalised advice from a licensed financial adviser before making insurance decisions.

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Explore related pages: Life Insurance, Income Protection, Health Insurance, Trauma Insurance, How Were Paid.