Insurance & Enduring Power of Attorney NZ: Guide | QuoteHub

By QuoteHub Editorial Team · Updated 2025-12-16

Insurance and Enduring Power of Attorney in NZ: Who Manages Your Policies If You Cannot

Most New Zealanders think about insurance in terms of what happens when they die or get sick. Far fewer think about what happens to their policies if they are alive but unable to manage their own affairs. A severe stroke, a traumatic brain injury, advanced dementia. These are real scenarios, and they raise a practical question: who keeps paying your premiums, who lodges your claims, and who makes decisions about your cover?

The answer, in most cases, is the person you have appointed under an Enduring Power of Attorney (EPA). If you have not appointed anyone, the answer becomes far more complicated and far more expensive.

This guide explains how EPAs interact with insurance in New Zealand, why every policyholder should have one, and what practical steps you can take to make sure your cover is protected if you lose the ability to manage it yourself.

What Is an Enduring Power of Attorney?

An Enduring Power of Attorney is a legal document that gives another person (called an attorney) the authority to act on your behalf. Unlike an ordinary power of attorney, an EPA continues to operate even after you lose mental capacity. That is the "enduring" part, and it is the reason EPAs matter so much for insurance.

In New Zealand, the Protection of Personal and Property Rights Act 1988 governs EPAs. There are two types, and each serves a different purpose.

EPA for Property

This covers financial and property matters. Your attorney for property can:

You can choose whether this EPA takes effect immediately (which is useful if you travel frequently or want help managing finances) or only when you lose mental capacity.

EPA for Personal Care and Welfare

This covers health and lifestyle decisions. Your attorney for personal care and welfare can:

This type of EPA only takes effect when you are assessed as lacking mental capacity. It cannot be activated while you are still able to make your own decisions.

Why this matters for insurance: Some insurance claims, particularly trauma and income protection claims, require both financial management and medical decision-making. Having both types of EPA in place ensures there are no gaps.

Why EPAs Matter for Insurance Policyholders

Insurance policies are ongoing contracts. They require regular premium payments, periodic reviews, and prompt action when a claim needs to be made. If you become incapacitated and no one has the legal authority to manage these obligations, several things can go wrong.

Premiums Stop Being Paid

This is the most immediate risk. If you suffer a serious injury or illness and cannot manage your finances, your premiums may simply stop being paid. Most insurers allow a grace period (typically 30 days), but after that, the policy lapses. The cover you have been paying for over years or decades disappears, precisely when you need it most.

An attorney for property can step in immediately to ensure premiums continue to be paid from your bank accounts or other assets.

Claims Are Not Lodged

You may be entitled to a significant payout under your trauma insurance, income protection, or total permanent disability (TPD) cover. But if no one has the authority to act on your behalf, these claims may not be lodged at all, or they may be lodged late, leading to delays and complications.

Policy Decisions Cannot Be Made

Insurers sometimes contact policyholders about policy changes, renewal terms, or options that need to be exercised within a timeframe. Without an EPA in place, no one can respond on your behalf. This can result in unfavourable default options being applied or cover being reduced.

What Happens Without an EPA

If you become mentally incapacitated and you do not have an EPA in place, your family cannot simply step in and manage your insurance. Being a spouse, adult child, or next of kin does not automatically give someone the legal right to manage your financial affairs or make decisions about your policies.

Instead, your family will need to apply to the Family Court for the appointment of a property manager under the Protection of Personal and Property Rights Act 1988. This process involves:

During this entire process, your insurance policies are in limbo. Premiums may go unpaid. Claims may go unlodged. And the people who depend on your cover are left waiting.

The contrast with having an EPA is stark. If you have appointed an attorney for property, that person can contact your insurer the same day you become incapacitated. They can pay premiums, lodge claims, and manage your policies without any court involvement.

How EPAs Interact with Specific Insurance Types

Income Protection Insurance

Income protection is arguably the policy type most affected by incapacity. If you suffer an illness or injury that prevents you from working, your income protection policy is designed to replace a portion of your income. But someone needs to lodge the claim, provide ongoing medical evidence, and manage the benefit payments.

Your attorney for property can:

Your attorney for personal care and welfare may also be involved, as insurers typically require ongoing medical assessments. The personal care attorney can consent to medical examinations and authorise the release of medical records to the insurer.

Practical tip: Income protection claims often require regular reviews (every three to six months). Your attorney needs to be aware of these requirements and prepared to coordinate with your medical team and the insurer on an ongoing basis.

Trauma (Critical Illness) Insurance

Trauma insurance pays a lump sum when you are diagnosed with a specified critical illness, such as cancer, heart attack, or stroke. Many of the conditions covered by trauma insurance are the same conditions that can leave someone unable to manage their own affairs.

Consider this scenario: you suffer a major stroke that qualifies for a trauma payout of $200,000. You survive but are left with significant cognitive impairment. You cannot communicate effectively with your insurer, fill out claim forms, or make decisions about how to use the payout.

With an EPA for property in place, your attorney can:

Without an EPA, your family faces months of court proceedings before anyone can access the money that was meant to support you.

Life Insurance with Terminal Illness Benefit

Many life insurance policies in New Zealand include a terminal illness benefit, which allows you to access a portion of the death benefit (often up to 100%) if you are diagnosed with a terminal illness and expected to live less than 12 months. If you are too unwell to manage your affairs at that point, your EPA attorney for property can lodge the claim and manage the payout.

Total Permanent Disability (TPD) Insurance

TPD cover pays a lump sum if you are permanently unable to work due to illness or injury. By definition, TPD claims involve severe and permanent conditions. Many people who qualify for TPD payouts are unable to manage their own financial affairs. An EPA ensures someone has the authority to claim and manage the proceeds.

Real Scenario Examples

Scenario 1: Stroke with No EPA

James, 52, suffers a severe stroke. He has income protection insurance and trauma cover. His wife Sarah tries to contact the insurer to lodge claims but is told she does not have authority to act on his behalf. Sarah engages a lawyer and applies to the Family Court. The process takes four months. During that time, no income protection payments are made, the mortgage falls behind, and the trauma claim sits unsubmitted. By the time Sarah is appointed as property manager, the family has accumulated significant debt.

Scenario 2: Stroke with EPA in Place

David, 52, suffers the same type of stroke. His wife Michelle is his attorney for property under an EPA executed three years earlier. The day after David's stroke, Michelle contacts his insurer, provides the EPA documentation, and begins the claims process. Income protection payments start within six weeks. The trauma claim is lodged simultaneously. The lump sum payout is used to modify their home and fund private rehabilitation. No court involvement is needed.

Scenario 3: Early-Onset Dementia

Karen, 61, is diagnosed with early-onset dementia. She still has capacity at the time of diagnosis, so she and her family use this window to set up EPAs. Her son is appointed attorney for property. As Karen's condition progresses and she loses capacity, her son takes over management of her insurance policies, ensures premiums are paid, and eventually lodges a trauma claim when her condition meets the policy definition.

Practical Steps to Protect Your Insurance

1. Set Up Both Types of EPA

If you have any insurance policies, you should have both an EPA for property and an EPA for personal care and welfare. You can use the same person as attorney for both, or appoint different people depending on their strengths.

Setting up an EPA requires a lawyer (the document must be witnessed by a lawyer who certifies that you understand what you are signing). The cost is typically between $300 and $800 for both EPAs, depending on your lawyer.

2. Choose the Right Attorney

Your attorney should be someone you trust completely, who is capable of managing financial matters, and who understands the importance of keeping your insurance in place. Consider:

It is a good idea to appoint a successor attorney in case your first choice is unable or unwilling to act when the time comes.

3. Tell Your Attorney About Your Insurance

Your EPA document gives your attorney the legal authority to act. But they also need to know what policies you have, who they are with, and how the premiums are paid. Prepare a summary that includes:

Keep this summary with your EPA documents and make sure your attorney knows where to find it.

4. Inform Your Insurance Adviser

If you have a financial adviser (and if you are managing multiple insurance policies, you probably should), let them know who your EPA attorney is. A good adviser can work directly with your attorney if you become incapacitated, making the transition much smoother.

At QuoteHub, we help New Zealanders get the right insurance cover in place. If you are reviewing your insurance arrangements, now is a good time to make sure your EPAs are sorted as well. Get a free insurance check to see where you stand.

5. Review Regularly

EPAs should be reviewed whenever your circumstances change significantly. Divorce, remarriage, the death of your appointed attorney, or a falling out with the person you have named are all reasons to update your EPA. This is no different from reviewing your life insurance beneficiaries or updating your will.

EPAs and Insurers: What to Expect

When your attorney contacts an insurer on your behalf, the insurer will typically ask for:

Most New Zealand insurers have processes in place for dealing with EPAs, but the experience varies. Some insurers handle it smoothly. Others may require multiple rounds of documentation or involve their legal team. Having your adviser involved can help navigate any friction.

It is worth noting that an EPA attorney's authority has limits. They must act in your best interests and in accordance with any instructions or restrictions included in the EPA document. They cannot, for example, cancel your insurance policies to free up cash for their own use. If an attorney acts improperly, they can be held legally accountable.

The Connection Between EPAs and Estate Planning

EPAs are one part of a broader estate planning picture. If you are thinking about what happens to your insurance if you become incapacitated, you should also be thinking about what happens if you die. That means having:

These documents work together. Your EPA covers you during incapacity. Your will covers what happens after death. Your insurance provides the financial safety net in both scenarios. Gaps in any of these areas can leave your family in a difficult position.

If you are unsure whether your current insurance arrangements are adequate, talk to a QuoteHub adviser for a free, no-obligation review.

Frequently Asked Questions

Can my spouse automatically manage my insurance if I become incapacitated?

No. Being married or in a de facto relationship does not give your partner legal authority to manage your insurance policies or financial affairs. They need to be appointed as your attorney under an EPA for property, or they will need to apply to the Family Court for a property management order, which takes time and costs money.

When should I set up an EPA?

As soon as you have assets or insurance policies worth protecting. Many people put it off because they think incapacity is something that happens to older people, but strokes, traumatic brain injuries, and other conditions can affect anyone at any age. The cost of setting up an EPA is modest compared to the cost and stress of not having one.

Can my EPA attorney change my insurance beneficiaries?

Generally, yes. An attorney for property has the authority to manage your financial affairs, which can include changing beneficiary nominations on insurance policies. However, they must act in your best interests. If you want to restrict this power, you can include specific limitations in your EPA document.

Does my insurer need to know about my EPA in advance?

There is no legal requirement to register your EPA with your insurer in advance. However, letting your insurer and your insurance adviser know that you have an EPA, and who your attorney is, can speed things up if the EPA ever needs to be activated.

What if I do not trust anyone enough to appoint them as my attorney?

You can appoint a professional trustee organisation, such as Public Trust or a private trustee company, as your attorney. They charge fees for their services, but they are subject to professional standards and regulatory oversight. This can be a good option if you do not have family members you trust with this responsibility.

Can my attorney lodge an income protection claim on my behalf?

Yes. Your attorney for property can lodge and manage income protection claims, including providing the insurer with financial documentation and managing benefit payments. They may need to work alongside your attorney for personal care and welfare if medical consent or information is required.

Disclaimer: This article is general information only and does not constitute financial advice. QuoteHub is operated under FSP 712931. For personalised advice about insurance and enduring powers of attorney, speak with a qualified financial adviser and a lawyer.

References

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