Group life insurance vs individual cover in NZ
Group life insurance is a policy an employer takes out for its staff. Within a pre-approved level, members are usually accepted without health questions, and the cover generally ends when employment does. Individual life cover is owned by you, underwritten on your own health, and stays with you when you change jobs. Some group schemes let a departing employee move to an individual policy without new health questions, but only within a short window and at the insurer's individual price.
In short
- Group cover is owned by your employer; individual cover is owned by you. That one fact explains most of the differences.
- Four insurers publish group continuation terms: AIA 60 days, Asteron Life 60 days only if the scheme includes the benefit, Fidelity Life 45 days (and only if you are moving to new employment), and Chubb Life with no stated period. Continuation waives health questions, not the price.
- Your employer decides the cover amount, so work out your own figure before you rely on it. If you have a mortgage or dependants, group cover alone is often not enough.
- If you cannot get underwritten cover when the job ends, guaranteed acceptance life cover (ages 18 to 65) is a fallback, with a 2-year exclusion for pre-existing conditions.
This page compares the two structures and shows what to ask. Our guide to employer life insurance versus your own cover goes deeper on benefits and tax.
What is the difference between group and individual life cover?
| Group life (through work) | Individual life (your own policy) | |
|---|---|---|
| Who owns the contract | Your employer | You |
| Who sets the amount | The employer, in the scheme rules | You |
| Health questions | None to a pre-approved level, then evidence above it | A full declaration, with tests above set cover amounts |
| What happens when you leave | Cover usually ends; a continuation option may let you transfer | Nothing changes while you pay |
| Who pays | Usually the employer, sometimes with an employee top-up | You |
| Choice of insurer and terms | The employer's | Yours |
Sources for the group column are the insurers' own pages: AIA Corporate Solutions Life Cover, Fidelity Life Group Life and Chubb Life Group, all read on 20 October 2026. Chubb describes an Automatic Acceptance Level as "a pre-approved level of cover that's been determined for the group", within which "we don't need to ask any medical or lifestyle questions". Fidelity gives automatic acceptance to eligible employees from age 16 (its page states the upper limit as 65 in one place and "under 65" in another). Cover under Fidelity's scheme ends at 70, which it can sometimes extend to 75. AIA's page sets age limits only for its continuation option: employees under 75 for life cover and under 70 for total and permanent disablement cover.
How group life insurance works in NZ
The employer chooses the insurer and the scheme and sets who is eligible and how much each person is covered for. We found no insurer page that states a typical salary multiple, so we do not print one: ask for your scheme's summary. Beyond the death benefit, schemes carry extras. AIA's Corporate Solutions Life Cover pays an early amount if you are diagnosed as terminally ill (likely to die within 12 months), and a bereavement payment that goes towards immediate costs such as the funeral and reduces the remaining life cover. Fidelity can arrange $15,000 immediately on a death, which is deducted from the death benefit. Total and permanent disablement cover is optional on AIA's scheme.
That is the answer to "how much does group life insurance pay out": whatever your scheme document says. Your employer holds the contract, so it can usually tell you the amount, who the nominated beneficiary is, and whether you can top up.
What happens to group cover when you leave your job?
It ends on the date the scheme says you stop being eligible. That is the central weakness, and the central question to ask before you rely on it.
| Insurer | Continuation to an individual policy | Conditions published |
|---|---|---|
| AIA | Application within 60 days | Under 75 for life cover; per AIA's July 2025 adviser FAQ |
| Asteron Life | 60 days of extended cover | Only if the policy schedule says a continuation benefit applies |
| Fidelity Life | Within 45 days | Must be moving to new employment, within the maximum age, meet occupation and residency rules, and not be eligible for a group claim |
| Chubb Life | Apply for your own policy "without further underwriting" | Terms and conditions apply; the page gives no number of days |
Sources: the AIA and Fidelity pages above, AIA's continuation FAQ for advisers, the Asteron Life resources page and the Chubb page, as summarised in our employer cover guide. Partners Life's group terms are not published, so we say nothing about them.
Three points follow. Continuation waives health questions, not price: the new premium is set at the insurer's individual rate, and an individual policy's cover and extras may differ from the group scheme's. Fidelity's rule that you must be moving to new employment means redundancy without a new job may not qualify; see redundancy cover and what changes when you change jobs. And the windows are short, so ask your HR team for the scheme's wording before your last day, not after.
Underwriting: automatic acceptance versus personal disclosure
Group cover to a pre-approved level is accepted without health questions, which is a real advantage for someone whose health would complicate individual underwriting. The limit is the level. Above it, or if you top up, expect evidence.
Individual cover asks for a health declaration and, depending on the amount and your answers, further evidence. The underwriting guides we read need only an application form up to $500,000 at every age band, and add a GP medical or paramedical exam and blood tests from $500,001 at 61 and over (Fidelity; Chubb). Those are minimums, and a disclosed condition can lead to more. Outcomes range from standard terms to a loading, an exclusion, a postponement or a decline. See no medical exam life insurance for how the exam and the questions differ.
If you are healthy, you may be able to apply for your own policy while still in the job, so that your cover does not depend on the continuation window. The wider point is that your health now and your health on your last day may not be the same.
What about tax?
Who owns the policy and who pays the premium decides the treatment. Inland Revenue's published views (QB 18/03 and QB 18/02) say:
| Situation | Premiums | Death claim |
|---|---|---|
| Employer owns a term life policy and pays | Deductible for the employer, not PAYE, but subject to fringe benefit tax | Not taxable income of the employee or their estate |
| Employee owns the policy, employer pays | PAYE applies | Lump sum claims are not taxable |
| You buy your own individual policy | Generally not claimed | Insurance payouts are generally excluded income, per Inland Revenue |
We write "generally not taxable" rather than "tax-free" because it depends on the facts. Group schemes are structured differently, so confirm yours with your employer's accountant or Inland Revenue. The fringe benefit tax is the employer's cost, not a deduction from your pay; the industry's push to remove it is covered in our news analysis.
How to combine group cover with an individual policy
- Get the scheme summary. Ask for the death benefit, any extras, the continuation terms and the age at which cover ends.
- Add up what your family would need. Include debts, ongoing living costs for dependants and any care costs. The life insurance calculator gives a starting figure.
- Subtract what you have. That means group cover, any individual policies and savings.
- Cover the gap on terms you control. Buy the difference as individual cover.
- Plan for the day the job ends. Decide now whether your own policy will replace the group cover, and do not cancel anything until the replacement is in force, as the FMA advises.
A worked example, using made-up round numbers, not averages. Suppose your scheme pays $180,000, you carry a $500,000 mortgage and your household would need a further $300,000 for several years of living costs. The gap is $620,000. If you stayed with the scheme alone, the family would have the $180,000 and a shortfall. An individual policy sized to the gap does not depend on your employer. For scale, the Premium Index gives indicative monthly cost for $500,000 of stepped cover (not the full $620,000 gap) as at 8 September 2026 (non-smoker, class 1, standard rates; not a quote, and your own premium depends on underwriting):
| Age | Man | Woman |
|---|---|---|
| 30 | $30 to $40 | $20 to $30 |
| 40 | $40 to $50 | $35 to $40 |
| 50 | $90 to $120 | $80 to $100 |
Source: QuoteHub Premium Index, a range across the insurers priced. Cost rises with age, which is worth knowing when you set the timing. See how much life insurance costs.
Where Momentum Life fits
Momentum Life's Quick Life is a guaranteed acceptance option if group cover ends and underwritten cover is not available. It takes ages 18 to 65, with cover of $50,000 to $300,000 per life, rising 3% each anniversary to 75 or a $500,000 cap. It asks no health questions. In the first 2 years, pre-existing conditions and suicide are excluded; accidental death and conditions that start after cover begins are covered. Premiums are stepped. It is a smaller amount than many mortgages need, and a healthy person can usually get more cover for less with fully underwritten cover through an adviser.
Momentum Life Limited holds an A.M. Best rating of B (Fair); see its financial strength page. QuoteHub is a Momentum Life partner, and Smiths Insurance & KiwiSaver may receive a commission if you buy through our link; see how we are paid. The buttons on this page lead to Momentum's online quote, and the guaranteed acceptance hub and guaranteed acceptance versus full medical set out the trade-offs.
Questions to ask your employer
- What does the scheme pay, and who is the beneficiary?
- Is there a continuation option, for how many days, and with which insurer?
- Does it apply if I am made redundant?
- At what age does cover end?
- Can I top up, and what evidence is needed?
- Can the employer change insurer or end the scheme, and would I be told?
Frequently asked questions
Can I have both group and individual life insurance?
Yes. Nothing in the sources we read prevents holding both, and many people do for exactly the reasons above. Each policy pays under its own terms.
Is group life insurance enough if I have a mortgage?
That depends on the scheme's amount and your debts. We found no published salary multiple, so compare the amount in your scheme summary with the gap you calculate, as in the example above.
What if I am made redundant?
Group cover ends when you stop being eligible. Fidelity Life's continuation option requires you to be moving to new employment, so redundancy alone may not qualify. Ask HR before your last day.
Does group life include trauma or income protection?
Not automatically. AIA lists total and permanent disablement as optional, and Chubb sells group life, TPD and trauma as separate lines. Check your scheme summary.
Can I continue my cover without new health questions?
Some schemes allow it, within a short window and at the insurer's individual price. Terms differ by insurer, as the table above shows.
References
- AIA New Zealand: Corporate Solutions Life Cover, retrieved 20 October 2026
- Fidelity Life: Group Life insurance, retrieved 20 October 2026
- Chubb Life: Group insurance, retrieved 20 October 2026
- AIA: Continuation options, adviser FAQ (July 2025)
- Asteron Life: Resources (Employee Insurance policy document)
- Inland Revenue: QB 18/03, term life policy taken out by an employer, retrieved 20 October 2026
- Inland Revenue: QB 18/02, retrieved 20 October 2026
- Inland Revenue: Insurance payouts, retrieved 20 October 2026
- Fidelity Life: Underwriting guide (October 2025), retrieved 20 October 2026
- Chubb Life: Essential underwriting guide (May 2025), retrieved 20 October 2026
- Momentum Life: Quick Life Insurance Policy Wording (November 2025), retrieved 17 October 2026
- Momentum Life: Financial strength, retrieved 20 October 2026
- Financial Markets Authority: Insurance, retrieved 20 October 2026
This article is general information, not personalised financial advice. Financial advice is provided by Craig Smith Business Services Limited, trading as Smiths Insurance & KiwiSaver, a licensed Financial Advice Provider (FSP712931). QuoteHub is a trading name.
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