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

What to do when an insurance claim is declined in NZ

If an insurer declines your claim in New Zealand, ask it in writing for the policy clause and the evidence it relied on, then use its own complaints process. If that does not settle it, you can take the complaint, free, to the dispute scheme your insurer belongs to. For IFSO, the insurer has up to 2 months to resolve a complaint, and you then have 3 months from its deadlock letter to refer it.

In short

This page is general information and not legal advice. A declined claim is stressful, and if you are dealing with it after a death or while arranging a funeral, read it in small pieces; the first step is only to ask for the reasons in writing.

The insurers that publish an acceptance rate accept most claims. Asteron Life reported paying 97% of the Trauma, Life and Income Protection claims it received from 1 July 2023 to 30 June 2024 (media release 11 December 2024), and AIA New Zealand accepted 91% of all claims received in the year ended 31 December 2025, paying $790 million to more than 789,000 New Zealanders (riskinfo NZ, 12 May 2026), both read 8 September 2026. Among those insurers a decline is the exception, which is exactly why one deserves to be understood rather than just accepted.

A person sits at a desk reading a letter stamped with a large cross, already reaching for the telephone beside them

Why was your claim declined?

Before you start, our claims readiness checklists list what each insurer will ask for and who to contact first. Published claims-outcome statistics by insurer, with their differing bases explained, are in our Claims & Insurer Strength report. The reasons below come from IFSO's published guidance and case notes and from policy wordings, not from a count of declines, which no source on file provides.

1. Non-disclosure

When you applied, you were asked health, lifestyle and financial questions. IFSO says "the law says that there is an obligation on insureds to disclose all material information", and it tests materiality with independent underwriters (IFSO, 10 July 2025). In one case the insurer applied 50% loadings retrospectively and paid a reduced stroke claim, and the complaint was not upheld. In another, an insurer sought to avoid cover over a childhood colonoscopy and an anaemia diagnosis from years earlier; the anaemia was material, and the claim settled at half the life benefit, $95,664 (IFSO, Cancer, non-disclosure). Insurers can avoid a policy or reduce a claim for non-disclosure, subject to the Insurance Law Reform Act 1977 (AIA policy wording).

2. An exclusion applies

Policies list exclusions, and IFSO says declined claims due to exclusions are a common complaint. Examples in published wordings include pre-existing conditions, dangerous pastimes and the effects of alcohol or drugs. The question to ask is whether the exclusion is in your policy wording as worded and whether the facts of your claim fall inside it.

3. The policy definition is not met

Trauma cover "will only cover certain specified life-threatening health conditions" (IFSO). You may have been diagnosed with something serious that does not match the policy's exact definition, as in our example of prostate tumours at Gleason 6, which one insurer pays in full and another excludes. Our trauma definitions guide and glossary explain the wording.

4. A waiting period, stand-down or early window applies

Income protection and health policies have waiting periods before benefits are payable. Some guaranteed-acceptance products restrict the first months by design. Momentum Life's Funeral Insurance pays only for accidental death in the first 24 months and refunds all premiums for any other death in that time. Quick Life excludes pre-existing conditions and suicide for the first 2 years and refunds premiums if a pre-existing-condition death in the first 24 months leaves no claim payable. That is the policy applying its own terms rather than a dispute about evidence, but you can still ask the insurer to show how it applied the definition to your facts.

5. The policy had lapsed

If premiums stopped, a policy can lapse. AIA's wording, for example, gives 30 days' grace for an unpaid premium and allows cancellation 31 days after the due date (AIA). Momentum's Funeral wording lets it cancel after a month unpaid, with reinstatement by application and "not guaranteed". Check the dates and any notices sent to you.

6. Fraud or exaggeration

If an insurer has evidence a claim is dishonest, it can decline it and in serious cases treat the policy as void. If you think you have been wrongly accused, ask for the evidence in writing and get independent advice.

Step by step: what to do

A declined claim is challenged in stages. Do them in order, keep copies of everything and note dates.

Step 1: ask for the decision, the clause and the evidence in writing

Ask the insurer to put the decision in writing, to quote the clause of the policy wording it relied on, and to list the information it used. If the language is technical, ask for a plain explanation. If the insurer's reply is a phone call, follow up with an email so you have a record.

Step 2: read the full policy wording

Use the full policy document, not only the summary or schedule. Look at:

Compare the decline letter with what the policy says. Our guide to reading a policy can help, and comparing the wording with another product shows what is standard.

Step 3: gather your evidence

Medical records and specialist reports relevant to the claim, your application, correspondence with the insurer or adviser, and financial records if it is an income claim. If the decline is based on non-disclosure, evidence of what you were actually asked and how you answered matters most.

Step 4: use the insurer's complaints process

The FMA's steps are to raise the issue with your provider through its complaints process first, then contact the provider's dispute resolution scheme if you still cannot resolve it (FMA). In your letter, say you are making a formal complaint, say why you think the decision is wrong, refer to the clause, and attach your evidence.

Step 5: take it to the approved dispute scheme

There are four approved schemes (FMA):

  1. Banking Ombudsman Scheme
  2. Insurance and Financial Services Ombudsman (IFSO) Scheme
  3. Financial Services Complaints (FSCL)
  4. Financial Dispute Resolution Service (FDRS), operated by FairWay Resolution

Which one applies depends on which scheme your insurer belongs to: check its complaints page or policy documents, or the Financial Service Providers Register. This page gives no FSCL or FDRS limits or time frames, because we could not read their published rules. Ask the scheme directly.

Key facts for IFSO, from its FAQs (IFSO FAQs, retrieved 20 October 2026):

Step 6: consider other routes

If the amount is within the Disputes Tribunal's limit, which it states as small claims up to $60,000 (Disputes Tribunal, retrieved 20 October 2026), it may be an option; check whether your claim fits before you file. For anything larger or legally complex, an insurance lawyer or a community law centre can tell you which time limits apply. We have not verified court time limits and do not give them here.

If your claim is with Momentum Life

Momentum's claims line is 0800 108 108 (Monday to Friday, 9am to 5pm), and claims go to [email protected] or Claims Manager, Momentum Life, PO Box 90136, Victoria St West, Auckland 1142 (Momentum: Claims). Complaints go to [email protected] or the same number; Momentum says it acknowledges within 2 business days (Momentum: Complaints). Its Quick Life wording says its complaints manager aims to reply in 10 business days, and its internal dispute resolution aims for a formal response within 2 months, then a deadlock letter and up to 3 months to go to IFSO. See the Momentum claims page for how a claim works.

Two Momentum rules explain many "no payment" outcomes. On Funeral Insurance, the first 24 months pay only for accidental death within 90 days of the accident, and premiums for that person are refunded for other deaths; after 24 months it pays for death from any cause. Total premiums can end up larger than the benefit, and the benefit may not cover the whole funeral; in an IFSO funeral case, where a 2010 policy gave no warning that premiums to age 90 could exceed the sum insured, the insurer refunded all premiums, and IFSO noted that funeral insurance "is not a savings product" (IFSO funeral case). On Quick Life, see the first 2 years above. Momentum Life Limited has an A.M. Best financial strength rating of B (Fair), affirmed on 11 February 2026 (Momentum: financial strength); a rating does not address claims-payment procedures. The buttons below this page lead to Momentum's own online quote.

What changes from 15 November 2027

The Contracts of Insurance Act 2024 is not yet in force. From 15 November 2027 (not yet in force) it replaces the current approach with a duty to take reasonable care not to make a misrepresentation, and the remedies depend on what the insurer would have done had it known. If it would never have contracted it may avoid the policy but must generally return premiums, and if it would have charged more it may raise the premium or reduce the claim proportionately; deliberate or reckless misrepresentation gets harsher treatment (Contracts of Insurance Act 2024; FMA). For a claim today the old law and your policy terms apply. Do not assume the new remedies already help you.

Time limits at a glance

Stage Time limit
Ask for reasons and the clause As soon as you get the decision; keep written copies
Insurer's complaints process Insurer's own timeframe; for IFSO schemes up to 2 months before a deadlock letter
IFSO referral 3 months from the deadlock letter (IFSO FAQs)
Other schemes (FSCL, FDRS, Banking Ombudsman) Ask the scheme; not verified here
Courts and Disputes Tribunal Ask a lawyer or community law centre; not verified here

The numbers in proportion

In the market as a whole, insurers paid $1.368 billion in life claims and $2.545 billion in health claims in the year to September 2025 (Financial Services Council State of the Sector report, reported by Insurance Business NZ, February 2026, read 8 September 2026). Insurers that publish an acceptance rate report 97% at Asteron Life for 1 July 2023 to 30 June 2024 (read 8 September 2026), 95% of assessed claims at Partners Life for the year to 31 March 2025 (read 18 August 2026), 93% at Fidelity Life for the year to 30 June 2025 (read 18 August 2026) and 91% at AIA New Zealand for the year ended 31 December 2025 (read 8 September 2026). The four bases differ, so the rates are not strictly comparable, and insurers that publish nothing are absent from the picture. Momentum publishes no claims statistics, and we do not estimate them.

Accept the decline, or challenge it?

It may be reasonable to accept a decline when the reason clearly matches the policy wording, an exclusion genuinely applies, the amount is small, or you did not disclose something you were clearly asked. It is worth challenging when the wording is ambiguous, the insurer appears to have misapplied its own terms, you answered what you were asked, or you hold medical evidence that contradicts its assessment. When in doubt, the scheme's enquiry line can tell you whether a complaint falls within its rules.

An adviser, and cover afterwards

If you bought through a licensed adviser, ask them to help with the complaint. The FMA says most insurance advisers are paid commission by the insurer, built into the premium, and some insurers claw back part of it if you cancel within a period, usually two years (FMA: Insurance advice), so ask how yours is paid. Advice is provided by Craig Smith Business Services Limited, trading as Smiths Insurance & KiwiSaver, a licensed Financial Advice Provider (FSP712931). QuoteHub is a Momentum Life partner, and Smiths Insurance & KiwiSaver may receive a commission if you buy Momentum cover through our link; see how we are paid.

If the claim was after a death, the probate guide explains when an insurer may ask for a grant. If your application, rather than a claim, was declined, read life insurance after a decline, and for funeral cover see the funeral insurance hub. Keep existing cover in force until any new cover has started.

A couple lean over a wide form covered in squiggly scribble lines, one ticking boxes with a pen

Frequently asked questions

Can I dispute an insurance claim that has been declined?

Yes. Start with the insurer's complaints process, then the approved dispute scheme your insurer belongs to. IFSO is free for consumers, and its lump-sum limit for deadlocks on or after 18 July 2024 is $500,000 plus GST.

How long do I have to challenge a declined claim in NZ?

For IFSO, the provider has up to 2 months and you then have 3 months from the deadlock letter to refer the complaint. Other schemes have their own rules, so ask them. Check dates early; do not wait.

Can a life insurance claim be denied in NZ?

Yes, for reasons such as non-disclosure, an exclusion, a definition not being met or an early window in the policy. IFSO case notes show insurers avoiding or reducing claims for non-disclosure, and some complaints are upheld for the consumer while others are not.

Does IFSO charge a fee?

No. It is free for consumers.

Should I get a lawyer for a declined insurance claim?

For many disputes the insurer's process and the scheme are enough. For a large claim or a legally complex one, or if the scheme cannot help, legal advice may be worthwhile; a community law centre can point you in the right direction.

References

General information only; this is not legal 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.

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, Free Will.