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

Insurance Glossary NZ: Every Term You Need to Know, Explained

Sum insured is the most an insurer will pay under a policy: for life cover, the lump sum paid on death. Other terms decide when and whether it is paid: stepped or level premiums, guaranteed acceptance versus underwriting, pre-existing conditions, stand-down windows, the free-look period and the insurer's financial strength rating. This glossary defines more than 80 of them in plain English, with Momentum Life's own wording as a worked example.

In short

• Terms mean what your policy wording says they mean. Insurers use the same word differently, so check the wording and schedule for your policy.
• Guaranteed-acceptance cover has no health questions but restricts the first two years. Momentum's Funeral Insurance pays only for accidental death in the first 24 months; Quick Life excludes pre-existing conditions and suicide for the first 2 years.
• A financial strength rating is an opinion on an insurer's ability to pay claims, not a recommendation. Momentum Life Limited holds an A.M. Best rating of "B (Fair)".
• A cooling-off or free-look period is a term of the contract, not a law. Check the length in your policy.

Insurance policies are full of terms that sound like plain English but carry very specific meanings. When you are comparing quotes, reading your policy wording, or talking to an adviser, understanding these terms matters. A single misunderstood definition can mean the difference between a smooth claim and a frustrating surprise.

This A-to-Z glossary covers 80+ insurance terms commonly used in New Zealand. Every definition is written in plain English with NZ-specific context where it applies. Where a definition depends on the insurer, we say so and use Momentum Life's published wordings as the example, because they are public and specific. Definitions here are general; your policy wording is what counts. For how to read one, see how to read an insurance policy.

A

Agreed value, any occupation and accelerated trauma are the New Zealand insurance terms beginning with A that most affect what a policy pays. Agreed value fixes the income protection benefit when the policy starts, any occupation restricts a claim to when you cannot work in any suitable job, and accelerated trauma reduces your life cover by the amount paid.

Accelerated Trauma

A trauma (critical illness) benefit that is linked to your life insurance policy rather than held as a separate standalone policy. If you claim for a qualifying trauma event, the payout comes from your life cover sum insured, reducing it by the amount paid. For example, if you have $500,000 of life cover with $200,000 accelerated trauma and you claim for cancer, your remaining life cover drops to $300,000. It is typically cheaper than standalone trauma cover because the insurer is not providing additional capital.

Accidental Death Benefit

A benefit that pays a lump sum if the policyholder dies as the direct result of an accident. Some policies include this as a built-in feature, while others offer it as an optional add-on. It does not cover death from illness or natural causes. On Momentum's Funeral Insurance, accidental death pays 3 times the benefit ($9,000 to $90,000) where death happens within 90 days of the accident, at any time during the policy. Wordings define "accident" narrowly, so read the definition.

Adviser

A financial adviser who holds a licence to provide personalised insurance advice. In New Zealand, advisers must operate under a Financial Advice Provider (FAP) that is licensed by the Financial Markets Authority (FMA). An adviser's job is to assess your situation, explain the options and help you through the claims process. The FMA says most insurance advisers are paid commission by the insurer, built into the premium (FMA: Insurance advice).

Agreed Value

A method of calculating your benefit where the insurer agrees on a fixed amount at the time the policy is taken out, regardless of your income at claim time. Common in income protection insurance. The alternative is indemnity value, where your benefit is based on your actual earnings at the time of the claim. Agreed value policies typically cost more but provide certainty. Read more in our agreed value vs indemnity guide.

Annual Renewable

A policy structure where the contract renews every 12 months. At each renewal, the insurer may adjust the premium (usually upwards as you age). Many NZ life, trauma and income protection policies use annual renewable, stepped premiums. See Stepped Premium.

Any Occupation

A definition used in income protection and TPD policies. Under an "any occupation" definition, you can only claim if you are unable to work in any occupation suited to your education, training, or experience. This is a stricter test than "own occupation" and generally results in lower premiums.

Application

The form and process you complete when applying for insurance. It includes personal details, health history, occupation, lifestyle, and financial information. The insurer uses this to assess your risk and decide whether to offer cover, and on what terms.

B

Beneficiary

The person or entity nominated to receive the insurance payout when a claim is made. Rules differ by insurer. Momentum pays the policy owner, then the nominated beneficiary, then the executor; only the owner can nominate or change a beneficiary on Quick Life, and a Funeral Insurance beneficiary must be a natural person, so Momentum cannot pay a company, charity or funeral director directly (Momentum Life: FAQs). Keep nominations up to date after major life events like marriage, separation or the birth of a child.

Benefit Period

The maximum length of time an insurer will pay a recurring benefit. In income protection, the benefit period might be two years, five years, or until age 65. A longer benefit period provides more protection but increases the premium. Choosing the right benefit period depends on your financial situation and how long you could manage without income.

Broker

In NZ insurance, "broker" and "adviser" are often used interchangeably. Under the financial advice regime, the term that matters is licensed adviser working under a licensed Financial Advice Provider. Check the licence on the Financial Service Providers Register.

Built-in Benefit

A benefit that is automatically included in a policy at no extra charge. For example, many NZ life insurance policies include a built-in funeral advance, terminal illness benefit, or financial planning benefit. These are sometimes called "standard benefits" or "included benefits."

Buyback

An option that allows you to restore your sum insured to its original level after making a partial claim. Common in trauma cover. If you claimed $100,000 of a $200,000 trauma policy and the policy includes a buyback option, you may be able to reinstate the full $200,000 (subject to underwriting and a stand-down period).

C

Claims acceptance rate, cooling-off (free-look) period and CPI indexation are the New Zealand insurance terms beginning with C that most often affect a claim. Three life insurers publish claims-paid rates between 93% and 97%, each defined its own way: Asteron Life paid out on 97% of the Trauma, Life and Income Protection claims it received from 1 July 2023 to 30 June 2024 (Asteron Life media release, 11 December 2024), Partners Life paid 95% of all assessed claims (Partners Life, *This is Partners Life 2025* claims brochure, claims assessed 1 April 2024 – 31 March 2025), and Fidelity Life accepted 93% of all new claims (Fidelity Life, *Claims we've paid* brochure, 1 July 2024 – 30 June 2025). All retrieved 20 October 2026. Cooling-off and free-look periods are set by each policy; see below.

Claim

A formal request to your insurer for payment under your policy. You are asking the insurer to honour their end of the contract based on an event that your policy covers. Claims can be for lump sums (life, trauma, TPD) or ongoing payments (income protection).

Claims Acceptance Rate

The percentage of claims that an insurer pays. Some NZ insurers publish these figures: Fidelity Life reported that 93% of all claims it received were accepted and paid in the year to 30 June 2025 (Fidelity Life, *Claims we've paid* brochure, retrieved 20 October 2026), and Asteron Life reported 97% for 1 July 2023 to 30 June 2024 (Asteron Life media release, 11 December 2024). Each insurer defines the figure differently, so do not rank insurers by it, and it does not tell you why other claims were not paid. Momentum Life publishes no claims statistics.

Commission

The payment an insurer makes to an adviser or comparison site for placing a policy. Upfront commission is paid when the policy starts and servicing (renewal) commission is a smaller ongoing payment. The FMA's 2016 review found upfront commission "can be as high as 200% of the annual premium, including bonus commissions" and servicing commission "could range from 5 to 25%"; some insurers claw back part of the upfront commission if you cancel, usually within two years (FMA: Insurance advice). Advisers must disclose how they are paid. 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.

Consumer Insurance Contract

Under the Contracts of Insurance Act 2024, a contract of insurance ordinarily entered into by a policyholder wholly or predominantly for personal, domestic or household purposes (Act, s 10). Personal life, health, home, contents, car, travel and pet insurance are typical examples. The Act is not yet in force: it starts on 15 November 2027 (FMA: Contracts of Insurance Act 2024).

Contestability Period

A term borrowed from overseas for the period in which an insurer can challenge a policy because of what was said at application. It is not a standard NZ policy term, and we have not found a fixed NZ period. From 15 November 2027 (not yet in force), the Contracts of Insurance Act 2024 says that, for a life policy, an insurer that would never have contracted can avoid it only if the misrepresentation was within the 3 years before avoidance or death, otherwise it may vary the policy (Contracts of Insurance Act 2024, Schedule 2). See Non-disclosure.

Cooling-off Period

A window after the policy starts or the documents arrive during which you can cancel for a refund. New Zealand has no statutory cooling-off right for life insurance in the Contracts of Insurance Act text we read, so the period is whatever your policy says. AIA's wording allows a refund if you return the policy within 15 days of receiving it and no claim has been made. Momentum gives 30 days: from the Acceptance Date on Funeral Insurance and from the policy start date on Quick Life. See Free Look Period.

CPI Indexation

An option that increases your sum insured each year in line with the Consumer Price Index (inflation). AIA's "CPI Linked" option raises the benefit each policy year by the annual CPI change and never lowers it. Not every indexation follows CPI: Momentum's Quick Life raises the benefit by a fixed 3% each anniversary until 75 or a $500,000 per-life cap, and you can opt out of an increase. Your premium rises with the benefit.

Cross-purchase Agreement

An arrangement between business partners where each partner owns a life insurance policy on the other. If one partner dies or suffers a serious illness, the surviving partner uses the insurance payout to buy the deceased partner's share of the business.

D

Deductible

See Excess. In NZ, "excess" is the more commonly used term for personal insurance, while "deductible" appears more often in commercial policies.

Disclosure Duty

What you must tell the insurer when you apply. IFSO says "the law says that there is an obligation on insureds to disclose all material information" (IFSO). From 15 November 2027 (not yet in force), the Contracts of Insurance Act 2024 changes the test for consumer contracts to taking "reasonable care not to make a misrepresentation", with remedies in proportion to the misrepresentation (s 13). Until then the current rules apply. Failing to disclose can lead to a reduced payout or a policy being avoided; see Non-disclosure.

Dual Benefit Period

A feature in some income protection policies that provides two distinct benefit periods: a shorter period for partial disability and a longer period for total disability. This structure can reduce the premium compared to a single long benefit period for both.

E

Excess

The amount you pay out of your own pocket before the insurer pays the rest of a claim. For example, a $500 excess on a health insurance policy means you pay the first $500 of an eligible claim. A higher excess lowers your premium but increases your out-of-pocket cost at claim time.

Exclusion

A specific condition, event or circumstance your policy does not cover. Some exclusions apply to everyone, such as war, and some are added to your policy because of your health or occupation. Exclusions are in the wording and schedule. Examples from Momentum's Quick Life: alcohol or drug effects, war, terrorism, criminal activity and listed dangerous jobs or pastimes are always excluded, and pre-existing conditions and suicide are excluded for the first 2 years.

Experience Refund

Some insurers offer a partial refund of premiums if you do not claim over a set period. Check the policy wording and any marketing claim against it: Momentum's wordings do not include a no-claims refund, and a cashback seen in marketing is not in the wording.

F

FAP, FMA and FSP number are the New Zealand insurance terms beginning with F that tell you whether an adviser is legitimate. Every financial adviser must operate under a Financial Advice Provider licensed by the Financial Markets Authority. Being listed on the Financial Service Providers Register with an FSP number is not the same as being licensed.

FAP (Financial Advice Provider)

A business entity that is licensed by the FMA to provide financial advice, including insurance advice. All financial advisers in NZ must operate under a FAP. When you check an adviser's credentials, look for their FAP's name, FSP number, and FMA licence status on the Financial Service Providers Register.

Financial Strength Rating

A rating assigned by an independent agency (such as A.M. Best, S&P or Fitch) giving an opinion on an insurer's ability to meet its obligations. A.M. Best calls its rating "an independent opinion of an insurer's financial strength and ability to meet its ongoing insurance policy and contract obligations", says it does not address claims-payment policies, and says it "is not a recommendation to purchase, hold or terminate any insurance policy" (A.M. Best: Guide to Best's Financial Strength Ratings). The grades differ by agency, so always name the agency and its word. See the plain-words scale below and our guide to insurer ratings.

FMA (Financial Markets Authority)

The government body that regulates financial markets in New Zealand, including the conduct of financial advice providers, insurers, and other financial service providers. The FMA licenses FAPs and monitors compliance with financial advice legislation.

Free Look Period

The days after a policy starts or is accepted in which you can cancel and get your premiums back if no claim has been made. It is a term of the contract, not a statutory right in the Contracts of Insurance Act text we read. Momentum gives 30 days: from the Acceptance Date on Funeral Insurance, from the policy start date on Quick Life. AIA's wording gives 15 days from receiving the policy. Other insurers' periods are in their policy documents. After the free-look period, cancelling usually ends the cover with no refund, and re-applying to Momentum restarts the 24-month or 2-year window.

FSP Number

A unique number on the Financial Service Providers Register (FSPR). You can look up a provider's number there. Being on the register does not mean a business is licensed or regulated by the FMA; check that the Financial Advice Provider holds a licence (FMA: Disputes and consumer protection).

Funeral Advance

A feature in some life policies that pays part of the sum insured quickly after a claim is accepted, to help with immediate expenses. Amounts differ: Kiwibank's life cover includes a $15,000 funeral expenses lump sum, and Southern Cross Life's Bereavement Support Benefit pays up to $25,000 of Life Cover early (each insurer's own site, retrieved 20 October 2026). Check the wording for the amount, the conditions and when it is paid.

G

Grace Period

A set number of days after a premium due date during which the policy stays active even though the premium has not been paid. AIA's wording gives 30 days, and cancellation is possible 31 days after the due date. Momentum's wordings let it cancel when a premium is more than a month unpaid, and reinstatement is by application and is not guaranteed.

Group Insurance

Insurance arranged by an employer or organisation for a group of people. Group life, income protection and health insurance are common in NZ workplaces. The cover belongs to the scheme and normally stops when the employment does; some schemes have a continuation option. See what happens when you change jobs.

Guaranteed Acceptance

A policy with no health questions or medical exam at application, so health does not decide whether you are accepted. In New Zealand it usually comes with limits: lower amounts, restrictions in the first years and often higher premiums for the cover. Momentum Life's two products show the two common shapes. Funeral Insurance (ages 40 to 75, $3,000 to $30,000) pays in the first 24 months only for accidental death within 90 days of the accident, and refunds all premiums for any other death in that window. Quick Life (ages 18 to 65, $50,000 to $300,000) excludes pre-existing conditions and suicide for the first 2 years. A healthy person can usually get more cover for less with fully underwritten cover through an adviser. See how guaranteed acceptance works.

Guaranteed Insurability

An option that allows you to increase your sum insured at certain life events (such as marriage, birth of a child, or taking on a mortgage) without further medical underwriting. This protects your ability to get more cover even if your health changes.

H

Hospital Cash Benefit

A benefit that pays a fixed daily amount for each day you are admitted to hospital. This is designed to help cover incidental costs (such as parking, extra childcare, or loss of income) rather than the hospital bills themselves.

I

Indemnity value, insurable interest and the IFSO scheme are the New Zealand insurance terms beginning with I worth knowing before a dispute. Indemnity income protection pays a percentage of actual earnings at claim time rather than a pre-agreed amount, and the Insurance and Financial Services Ombudsman offers free independent dispute resolution and every business offering retail financial services must belong to one approved scheme; IFSO is one of four.

IFSO Scheme

The Insurance & Financial Services Ombudsman Scheme: a free, independent dispute resolution service for complaints about insurers and other Participants. Every business offering retail financial services must belong to an approved scheme, and there are four; IFSO is one (FMA: Disputes). You complain to the provider first. See insurance complaints and IFSO.

Indemnity Value

A method of calculating your benefit based on your actual financial position at the time of the claim, rather than a pre-agreed amount. In income protection, an indemnity policy pays a percentage of your actual earnings at the time you become unable to work. If your income has dropped since you took out the policy, your benefit will be lower. Compare with Agreed Value.

Inflation Protection

See CPI Indexation.

Insurable Interest

The idea that a policyholder should stand to lose if the insured event happens. For life policies, the Contracts of Insurance Act 2024 says a policy is not void because the policyholder had no interest in the life insured (sections 75 and 76). That applies from 15 November 2027 and is not yet in force (Contracts of Insurance Act 2024).

K

Key Person Insurance

A policy taken out by a business on the life (or health) of a person whose death or incapacity would cause significant financial loss to the business. The business owns the policy, pays the premiums, and receives the payout. Common for business owners, directors, and essential employees. See our key person insurance guide for more detail.

L

Lapse

When a policy ends because premiums have not been paid after the grace period expires. A lapsed policy provides no cover. If you want to reinstate a lapsed policy, most insurers will require a new application and potentially new underwriting, which could result in exclusions or higher premiums based on your current health.

Level Premium

A premium structure where the amount is fixed for a set period or for the life of the policy, subject to the policy's rate-change terms. Level premiums start higher than stepped ones and do not rise with age during the level period. Whether level costs less over time depends on how long you keep the policy; we do not publish a crossover age. Some level periods end: an IFSO case involved a "Level to age 80" policy that converted to Rate for Age at 80 and went from $49 to $190 a month (IFSO: Increasing premiums). See stepped vs level premiums.

Life Assured

The person whose life is insured under the policy. This is often the same as the policyholder, but not always. For example, a parent might be the policyholder on a policy where the life assured is their child.

Loading

An increase to the standard premium that reflects a higher-than-normal risk. If your health, occupation, or lifestyle presents additional risk, the insurer may apply a loading (e.g., +50% loading means you pay 50% more than the standard premium). Loadings are disclosed in your policy schedule.

M

Material Information

Information that would influence an insurer's decision to offer cover or the terms. IFSO tests materiality with independent underwriters; in one case an anaemia diagnosis was material and the claim settled at half the life benefit (IFSO).

Moratorium

A type of underwriting approach used mainly in health insurance. Under a moratorium, conditions you have had symptoms of or treatment for within a set period before the start date are excluded. If you stay symptom-free for a further continuous period after the policy starts, the condition may become covered. The periods are set by each insurer's wording.

Multi-life Discount

A premium discount when more than one person is insured. Examples from published wordings: Momentum's Quick Life takes $50 a year off when a partner joins, its Funeral Insurance takes $150 a year off for each extra life, and AA Life and Chubb Life each advertise a 20% joint discount on funeral cover. Not every insurer offers one.

N

Nominated Beneficiary

See Beneficiary. The specific person or entity you have named to receive the insurance payout.

Non-disclosure

Failing to give the insurer material information at application. It can be innocent or deliberate. Today, an insurer can reduce, decline or in some cases avoid on the basis of it: Momentum's Quick Life wording lets it decline a claim, reduce the benefit or cancel, and treat a deliberately false application as though the policy never existed. From 15 November 2027 (not yet in force), the Contracts of Insurance Act 2024 replaces this with a reasonable-care test and remedies in proportion to the misrepresentation. Being honest about every symptom and condition is the safest course.

O

Occupation class, own occupation and ownership structure are the New Zealand insurance terms beginning with O that quietly drive both price and claim outcomes. Occupation class groups jobs from low risk office work to higher risk manual trades, own occupation lets you claim when you cannot perform your specific job, and ownership structure decides who controls the policy.

Occupation Class

A classification system insurers use to assess the risk associated with your job. Occupations are typically grouped into classes from low risk (e.g., office-based professionals) to high risk (e.g., manual labourers, certain trades). Your occupation class directly affects your premium. Someone working at a desk will generally pay less than someone working on a construction site.

Own Occupation

A definition used in income protection and TPD policies. Under an "own occupation" definition, you can claim if you are unable to perform the duties of your specific occupation, even if you could theoretically do a different job. This is a broader, more generous definition than "any occupation" and typically comes with a higher premium.

Ownership Structure

Who owns the policy. Common structures include personal ownership, trust ownership, superannuation fund ownership and business ownership. Ownership decides who can change the policy and who is paid. Wordings can restrict it: Momentum's Quick Life wording lists the insured, or an immediate family member limited to parents or siblings with the insured's consent, and it does not list a trust, so do not assume a trust can own it. Funeral Insurance lets an adult child own a policy on a parent.

P

Partial Disability Benefit

A benefit in income protection that pays a reduced amount when you can work in a limited capacity but cannot perform all of your normal duties. The benefit is usually calculated based on the difference between your pre-disability income and your current reduced earnings.

Policy Anniversary

The date each year when your policy renews. Premium adjustments (for stepped premiums), CPI increases, and other annual changes typically take effect on this date.

Policy Wording

The legal document that sets out the full terms and conditions of your insurance contract. It defines what is covered, what is excluded, how to make a claim, and the insurer's obligations. Always read the policy wording, not just the marketing material. If something is not in the wording, it is not part of your cover.

Pre-existing Condition

A health condition, injury or illness that existed before you applied. Insurers assess these at underwriting and may exclude them, load the premium, postpone or decline. Definitions differ. Momentum's Quick Life defines it as an illness, condition or symptoms in the 2 years before the start, increase or reinstatement, including anything treated or noticed even if undiagnosed, and includes "very high blood pressure, cholesterol over 7.0, a BMI over 40, or complications related to diabetes". Quick Life excludes pre-existing conditions for the first 2 years. IFSO says a pre-existing condition "can include a symptom, a sign, or a circumstance" without a diagnosis in the health and travel context (IFSO).

Premium

The amount you pay for cover. Premiums can be paid monthly, fortnightly or annually. Momentum notes a processing fee applies to card payments. Your premium depends on factors such as age, smoker status, sum insured and structure. For life cover, QuoteHub's September 2026 Premium Index shows age is the largest driver (QuoteHub: life insurance premiums).

Premium Holiday

A feature that lets you pause premiums while keeping the policy in force. Availability, length and effects on benefits differ by insurer, so check the wording before you rely on one.

Premium Waiver

A feature that pauses your premium payments while you are receiving a benefit under the policy. For example, if you are claiming on your income protection policy, a premium waiver means you do not have to keep paying premiums on that policy (and sometimes on linked policies) during the claim period.

Q

Qualifying Period

See Stand-down Period. The terms are often used interchangeably in NZ.

R

Rate for Age

AIA's name for a stepped premium: the premium is re-set each year for your age. An AIA policy sold as "Level for 10 years, to 65 or to 80" converts to Rate for Age when the level period ends (AIA Living umbrella policy wording v8). See Stepped Premium.

Reinstatement

Reactivating a policy that has lapsed for non-payment. Terms vary. Momentum's Funeral Insurance reinstatement is by application and "not guaranteed"; on Quick Life, paying late does not automatically reinstate, and the 2-year period restarts on reinstatement.

Replacement Policy

A new policy taken out to replace an existing one. The FMA says to keep the old policy running until the new one is in force, and to watch for new qualifying periods, pre-existing-condition exclusions and different premiums (FMA: Insurance). The new insurer sees your full history. If you replace cover with a Momentum product, the 24-month and 2-year windows start again.

Rider

An add-on or optional extra attached to a base insurance policy. For example, a trauma rider added to a life insurance policy provides critical illness cover on top of the life cover. Riders allow you to customise your cover without taking out a completely separate policy.

S

Stand-down period, stepped premium and sum insured are the New Zealand insurance terms beginning with S that shape both cost and payout. Stand-down periods are chosen when you set up an income protection policy, stepped premiums rise each year with age while level premiums do not, and the sum insured caps what an insurer will pay.

Schedule

The personalised summary document attached to your policy. It lists your name, the type of cover, your sum insured, premium, excess, benefit period, any exclusions or loadings specific to you, and other key details. The schedule and the policy wording together form your complete insurance contract.

Special Conditions

Additional terms applied to your specific policy based on your individual risk profile. These might include exclusions for particular conditions, loadings on your premium, or modified benefit terms. Special conditions are listed in your policy schedule.

Stand-down Period

Either of two things. In income protection, the time you must be unable to work before a benefit begins paying; it is set in your schedule, and a longer period usually lowers the premium. In guaranteed-acceptance life and funeral cover, an early window in which the cover is restricted. Momentum's Funeral Insurance pays only for accidental death for the first 24 months (other deaths refund all premiums), and Quick Life excludes pre-existing conditions and suicide for the first 2 years. Also called a waiting or qualifying period.

Stepped Premium

A premium that rises each year as you age. Stepped premiums start lower than level ones at younger ages and become much more expensive later: in QuoteHub's September 2026 Premium Index, a man's $500,000 non-smoker cost rises roughly eighteen-fold from age 30 to 65 (QuoteHub: life insurance premiums). Momentum's Quick Life is stepped to 75 and then fixed. See stepped vs level premiums.

Subrogation

The right of an insurer, after paying your claim, to pursue a third party who caused the loss. For example, if another driver causes an accident and your insurer pays for repairs, the insurer may recover costs from the at-fault driver's insurer.

Sum Insured

The most your insurer will pay under the policy. For life insurance, it is the lump sum paid on death; for income protection, a monthly benefit. Indexation can raise it over time, as with Quick Life's 3% a year. Your premium moves with it. Choosing the amount is one of the key decisions when setting up cover, and a single person needs a different figure from someone with dependants.

Surrender Value (Cash Value)

The amount, if any, you receive when you cancel. Most term life and funeral policies have none. Momentum's Quick Life states it has no cash value, and AIA's wording gives no surrender value. If you cancel after the free-look period you lose the premiums you have paid. Do not buy a protection policy expecting it to behave like savings; IFSO's comment on a funeral policy was "It is not a savings product" (IFSO).

Surplus Recovery

A feature in some income protection policies where, if you return to work earning more than your pre-disability income, the insurer may reduce or stop the partial disability benefit to prevent over-insurance.

T

Terminal Illness Benefit

A feature that pays the sum insured, or part of it, early if you are diagnosed with a terminal illness and expected to die within a stated period. Periods and rules differ: Momentum's Quick Life pays where death is expected within 12 months, and the payment ends the cover; Momentum's Funeral Insurance has no terminal illness benefit; AA Life's funeral cover starts terminal illness cover after 24 months.

Total and Permanent Disablement (TPD)

A lump sum benefit paid if you become totally and permanently disabled and are unlikely ever to return to work. The definition of TPD varies between policies. It may use an "own occupation" or "any occupation" test, and some policies include additional criteria such as loss of limbs, sight, or cognitive function.

Trauma Cover

Also called critical illness cover. It pays a lump sum on diagnosis of a listed serious condition. IFSO says trauma cover "will only cover certain specified life-threatening health conditions", and declined claims due to exclusions are a common complaint (IFSO). Check which conditions are listed and how each is defined.

Trust Ownership

A policy owned by trustees. Ownership decides who controls the policy and who receives the payout. For tax, the Inland Revenue says insurance payouts are generally excluded income, but we do not give a view on the tax or probate treatment of trust-owned policies. Ask a lawyer or accountant.

U

Underwriting

The process an insurer uses to assess your application and determine the terms on which they will offer cover. During underwriting, the insurer evaluates your health, occupation, lifestyle, financial situation, and other risk factors. The outcome may be standard terms, an exclusion, a loading, a deferral, or a decline.

Utmost Good Faith

A long-standing principle that insurer and policyholder deal honestly with each other. How it interacts with the new disclosure rules in the Contracts of Insurance Act 2024 (from 15 November 2027, not yet in force) is for a lawyer to explain.

V

Voluntary Excess

An additional excess amount you choose to pay on top of the standard excess, in exchange for a lower premium. Common in health insurance and general insurance. The higher your voluntary excess, the lower your premium, but the more you pay out of pocket at claim time.

W

Waiting Period

See Stand-down Period. In NZ personal insurance, these terms mean the same thing. In health insurance, "waiting period" may also refer to the period after policy commencement before certain benefits become available (for example, a wait before pre-existing conditions are considered under a moratorium).

Waiver of Premium

See Premium Waiver.

Terms that decide a guaranteed-acceptance claim

Guaranteed acceptance means you are accepted without health questions, but the terms below decide whether and when a claim is paid. This table sets out Momentum Life's two products side by side, from the policy wordings. Entry ages and rules are Momentum's, and other insurers differ.

Sources: Momentum Life: Funeral Insurance Policy Wording (17 August 2023) and Quick Life Insurance Policy Wording (November 2025). Both early windows are two years long; they cover different things. Total premiums on Funeral Insurance can end up larger than the benefit, and the benefit may not cover a whole funeral. See funeral insurance and guaranteed acceptance, or the plan pages for Quick Life and Funeral Insurance.

Financial strength ratings in plain words

A financial strength rating is an agency's opinion of how well an insurer can meet its obligations. A.M. Best's scale from the top is A++ and A+ Superior, A and A- Excellent, B++ and B+ Good, B and B- Fair, C++ and C+ Marginal, C and C- Weak, and D Poor. A.M. Best describes Fair as "a fair ability to meet their ongoing insurance obligations. Financial strength is vulnerable to adverse changes in underwriting and economic conditions" (A.M. Best: Guide to Best's Financial Strength Ratings, retrieved 20 October 2026).

Momentum Life Limited has a rating of B (Fair) from A.M. Best, affirmed on 11 February 2026. Momentum's own table groups B (Fair) in what it calls the "Vulnerable" range. Momentum's solvency disclosure shows a ratio of 107% at 30 June 2026 (Momentum Life: Financial strength). A rating is an opinion and not a recommendation, and Momentum says as much.

The same letter means different things at different agencies. B is "Fair" at A.M. Best but "Weak" on the Fitch and S&P scales as insurers print them, so always name the agency and its word. We do not convert one agency's grade into another's. For a fuller guide, see insurer financial strength ratings.

How to read your policy wording

1. Start with the schedule. It lists your sum insured, premium, start date and any exclusions or loadings that apply to you.
2. Find the definitions. Words like "accident", "pre-existing condition" and "terminal illness" are defined, and the definition is what a claim is tested against.
3. Read the early-window clause. Look for the first months or years, and what is and is not paid in them.
4. Check how the premium changes. Is it stepped or level, until what age, and can the insurer change the rate?
5. Note the free-look period and cancellation terms. The free-look period is short, so diarise it.
6. Check who owns the policy and who is paid. Owner, beneficiary and estate can differ.
7. Ask. Your adviser or the insurer can explain a clause, and if you are unhappy with an answer, IFSO offers a free dispute service.

Not sure where to start?

If you have read through this glossary and realised your own cover could use a review, or you are looking at insurance for the first time, get a free insurance check with QuoteHub. We will match you with a licensed adviser who can walk you through the terms that actually matter for your situation.

Frequently Asked Questions

What is the difference between an excess and a deductible?

In New Zealand, they mean the same thing. "Excess" is the term used in most NZ consumer insurance policies, while "deductible" appears more often in commercial or international policies. Both refer to the amount you pay out of your own pocket before the insurer covers the rest.

Why do insurers use so much jargon?

Insurance is a legal contract, and many terms carry precise legal meanings that differ from everyday language. Insurers write wordings to be specific about what is and is not covered, which can make them hard to read. Your adviser or the insurer can explain a term, and this glossary and our guide to reading a policy can help.

What should I do if I do not understand a term in my policy?

Ask your adviser. It is their job to explain your cover in language you understand. You can also contact the insurer directly, or refer back to this glossary. If you are not happy with the explanation, the IFSO scheme provides a free dispute resolution service.

Is there a difference between "own occupation" and "any occupation"?

Yes, and it matters significantly at claim time. "Own occupation" means you can claim if you cannot do your specific job. "Any occupation" means you can only claim if you cannot do any job suited to your skills and experience. Own occupation is the broader, more protective definition, and typically costs more.

How do I check my adviser is properly licensed?

Search for their name or FSP number on the Financial Service Providers Register (FSPR) at fsp-register.companiesoffice.govt.nz. Being on the register is not the same as being licensed, so confirm that their Financial Advice Provider holds a current FMA licence. QuoteHub is a trading name of Craig Smith Business Services Limited, a licensed Financial Advice Provider (FSP712931).

Need help making sense of your insurance?

Insurance terms are only useful if they help you make better decisions about your cover. If you want a straightforward conversation about what you actually need, talk to a QuoteHub adviser. No jargon, no pressure, just clear advice.

Reviewed by the QuoteHub Adviser Team; last reviewed 20 October 2026. Disclaimer: 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. Henry Smith is a Financial Adviser (FSP1010699). The information in this glossary is general in nature and does not constitute personalised financial advice. Insurance terms and definitions may vary between insurers and policy types. Always refer to your specific policy wording for the terms that apply to your cover. For advice tailored to your situation, speak with a licensed financial adviser.

References

• A.M. Best: Guide to Best's Financial Strength Ratings, retrieved 20 October 2026
• Momentum Life: Funeral Insurance Policy Wording (17 August 2023), retrieved 20 October 2026
• Momentum Life: Quick Life Insurance Policy Wording (November 2025), retrieved 20 October 2026
• Momentum Life: Financial strength, retrieved 20 October 2026
• FMA: Insurance advice, retrieved 20 October 2026
• FMA: Disputes and consumer protection, retrieved 20 October 2026
• FMA: Contracts of Insurance Act 2024, retrieved 20 October 2026
• Contracts of Insurance Act 2024, retrieved 20 October 2026
• IFSO: case studies and non-disclosure guidance, retrieved 20 October 2026
• AIA: Living umbrella policy wording v8, retrieved 20 October 2026
• Asteron Life: Life Insurer of the Year reports 97% claims payout rate, 11 December 2024 (retrieved 20 October 2026)
• Partners Life: This is Partners Life 2025 claims brochure, claims assessed 1 April 2024 to 31 March 2025, retrieved 20 October 2026
• Fidelity Life: Claims we've paid customer brochure, 1 July 2024 to 30 June 2025, retrieved 20 October 2026

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