Is life insurance compulsory in New Zealand?
No. We found no New Zealand law that requires an adult to hold life insurance, and the Financial Markets Authority's consumer page frames the decision around whether other people depend on you. ACC cover for injuries is automatic, but it is not life insurance and it does not cover death from illness. A lender can ask for some insurance as a loan condition, but that is a term of the loan, not a legal duty to hold life cover.
In short
- We found no law that makes private life insurance compulsory. The FMA says: "If there are people who depend on you financially, you may need insurance to protect them" (FMA: Insurance, updated 28 September 2026). That is a prompt to think, not a rule.
- ACC pays for covered injuries and, after a death from a covered injury, makes funeral and survivor payments. It pays nothing after a death from illness (ACC: Financial support after a death).
- Section 69 of the Credit Contracts and Consumer Finance Act 2003 stops a lender making an unreasonable requirement about credit-related insurance. In the lender guidance we checked (ANZ's), house insurance is a condition and life cover is something to consider.
- Without life cover, your debts in your name alone are paid from your estate, and what is left goes under your will or the intestacy rules. This is general information, not legal advice.
This page answers one question: is anything forcing you to buy life cover? It is a short set of questions and answers. If you want to know how much cover a mortgage calls for, read do you need life insurance for a mortgage. For the bank-specific version, see is life insurance mandatory for a mortgage.
Is there a law that makes me buy life insurance?
We found none. The rules we could read treat life insurance as a product you choose to buy. The FMA's consumer page on insurance does not say anyone must hold life cover. It lists what to think about before buying: the type and amount of cover, how the price changes over time, how the policy defines its terms, honest answers to health questions, and whether another product already covers you.
We are not lawyers and we have not searched every statute and regulation. If a contract, an employer or a court order says you must hold insurance, that is a separate matter and you should read the document. Nothing we found makes a private life policy a legal duty for an adult.
Is ACC the same as compulsory life insurance?
No. ACC is the public accident scheme. It covers injuries, not illness. For a death from a covered injury, ACC says it pays a funeral grant of up to $8,236.40, a survivor's grant of $8,830.47 to a partner and $4,415.25 for each child under 18 or dependant, and may pay loss-of-income support of up to 80% (ACC: Financial support after a death, page last published 22 July 2026). For a death from illness, ACC pays none of these. Illness is the gap that private life insurance is built for. The full comparison is in ACC versus private insurance.
Can a bank make me take out life insurance?
A lender can set conditions for a loan, but it cannot make an unreasonable demand about insurance. Section 69 of the Credit Contracts and Consumer Finance Act 2003 says a creditor "must not make any unreasonable requirement as to the terms on which the debtor is to take out or obtain credit-related insurance". It adds that "a requirement is unreasonable if it is not reasonably necessary for the protection of the legitimate interests of the creditor" (CCCFA 2003, retrieved 19 August 2026).
The Responsible Lending Code, in force from 31 July 2024, says that unless the lender requires the borrower to obtain credit-related insurance, it "should explain that credit-related insurance is optional" and the borrower should expressly opt in (MBIE: Responsible Lending Code, retrieved 19 August 2026).
In practice, ANZ's home buying guidance says "you must have adequate house insurance in place before settlement day", and describes life cover as something you "may also want to consider" (ANZ, retrieved 19 August 2026). We did not survey every lender, so ask yours.
What if a lender asks for an assignment or its own policy?
Then it is a term of your loan contract, which is a private agreement between you and the lender. It is not a statute. Ask the lender in writing whether the insurance is a condition of the loan or an optional extra, and what happens to the cover if you refinance. Read the loan documents before signing, and get independent legal advice if the terms are unclear.
Loan protection policies work differently from personal life insurance. The Banking Ombudsman says that "loan protection policies pay out to the lender rather than to the insured (or his or her estate), as happens with life insurance policies" (Banking Ombudsman Scheme, retrieved 19 August 2026 from an archived copy). A policy that pays the lender is not the same as cover that pays your family.
What happens if I die without life insurance?
Nothing happens automatically to your family's finances beyond the normal estate rules. These are the main points, from government and legal sources.
- Debts in your name alone are paid from your estate (Administration Act 1969, s 26; legislation.govt.nz). Debts you share with someone else need checking with the lender.
- A joint bank account passes to the other owner and is not part of the estate (Community Law).
- Benefit payments to a partner may continue for up to 28 days in some cases, then end (Work and Income).
- Funeral costs. The Work and Income Funeral Grant is up to $2,697.43, and other help, including prepaid funeral cover, can affect eligibility (Work and Income: Funeral Grant). The funeral industry's 2026 report gives an average of $11,700 for a full funeral with cremation for 50 guests (FDANZ).
- Probate. The fee is $275 (Ministry of Justice). See probate in New Zealand.
Whether that matters depends on who relies on you. For someone with no dependants and enough savings, no cover may be a reasonable choice. For a parent with a mortgage and young children, it is a larger risk.
Is funeral insurance compulsory?
No. We found no rule that requires anyone to take out funeral cover. Momentum Life's Funeral Insurance is open to ages 40 to 75, with acceptance guaranteed, but in the first 24 months it pays only for accidental death; any other death in that window pays no benefit and premiums are refunded. Total premiums can end up larger than the benefit, and the benefit may not cover the whole funeral. Read is funeral insurance worth it before deciding.
Who is life insurance worth thinking about for?
People whose death would leave someone with a financial gap: a partner who needs the income, children, a mortgage or personal debt in joint names, a business partner. People without these gaps often have other ways to cover the cost of dying, such as savings. The honest test is not whether the law makes you, but whether anyone would be worse off. Use the funeral cover amount calculator to size a funeral-only need.
Advice is provided by Craig Smith Business Services Limited, trading as Smiths Insurance & KiwiSaver, a licensed Financial Advice Provider (FSP712931). This is general information, not personal advice. 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. Momentum Life's A.M. Best rating is B (Fair); see Momentum's financial strength page. Quick Life, Momentum's guaranteed acceptance life cover for ages 18 to 65, 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 Quick Life for the plan details, and use the buttons on this page only if you have decided you want a quote.
Frequently asked questions
Do I need life insurance to get a home loan?
Not as a legal rule. Lenders require house insurance. Life cover is generally optional, but check with your lender and ask for any requirement in writing.
Is life insurance compulsory for a business loan?
We have no source on commercial lending terms. A commercial lender can set its own conditions in the loan contract, so read the facility letter and security documents and ask for advice.
Does my employer have to provide life insurance?
We found no rule requiring it. Some employers offer group cover as a benefit. If you have it, check what it pays and whether it ends when you leave.
Do I have to tell my family about my policy?
It is not a legal duty, but the FMA suggests telling family about any life or funeral cover you hold so they can make a claim.
References
- Financial Markets Authority: Insurance, retrieved 20 October 2026
- ACC: Financial support after a death, retrieved 20 October 2026
- Credit Contracts and Consumer Finance Act 2003, retrieved 19 August 2026
- MBIE: Responsible Lending Code (July 2024), retrieved 19 August 2026
- ANZ: Planning your home loan, retrieved 19 August 2026
- Banking Ombudsman Scheme: Insurance policies, retrieved 19 August 2026
- Administration Act 1969, retrieved 20 October 2026
- Community Law: Dealing with the deceased's property, retrieved 20 October 2026
- Work and Income: Payments when a client dies, retrieved 20 October 2026
- Work and Income: Funeral Grant, retrieved 20 October 2026
- Ministry of Justice: Probate information and guidance, retrieved 20 October 2026
- FDANZ: 2026 New Zealand Funeral Industry Trends Report (PDF), retrieved 20 October 2026
- Momentum Life: Financial strength, retrieved 20 October 2026
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