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

Is life insurance worth it in New Zealand?

Life insurance is worth it when someone would be worse off financially if you died: a partner who relies on your income, children, or a debt they share with you. It is often poor value when nobody depends on you and your savings or estate could cover what falls due. Stepped premiums rise each year, so the answer can change as debts fall and savings grow.

In short

This page looks at value, not at which insurer to pick. If you want the amount, read how much life insurance do I need. For mortgages specifically, see do you need life insurance for a mortgage.

What does "worth it" actually mean?

Life insurance is a contract in which you pay premiums and the insurer pays a lump sum if you die, subject to the policy terms. Most people who pay premiums will never claim in the year they pay, and that is how insurance works. It is not a savings product. So "worth it" is not about getting your premiums back. It is about whether a lump sum at the worst moment would do a job that matters more than the premiums cost.

The honest comparison is a payout that clears a debt or replaces income for a family, against a premium that rises with age. Both change over time, which is why a one-off yes or no is the wrong frame.

A four-step need test

  1. List what a payout would have to do. Debts that would fall to others (a mortgage, a joint loan), final costs, and income your household would lose.
  2. Subtract what you already have. Savings, KiwiSaver you could use, other insurance, and money a partner would still earn.
  3. Check what happens without cover. Debts in your name alone are paid from your estate (Administration Act 1969, s 26; legislation.govt.nz), and a joint bank account passes to the other owner (Community Law). Debts shared with someone else are different, so check with the lender.
  4. Price the gap. Compare the shortfall with the premium for that amount of cover.

A worked example with assumed numbers

The figures below are assumptions to show the method. They are not a forecast and not anyone's real position. Assume a household where one partner, aged 40, earns the main income.

Item Age 40 Age 50 Age 60
Mortgage still owing (assumed) $450,000 $270,000 $90,000
Final costs (assumed, about the FDANZ burial average) $15,000 $15,000 $15,000
Years of income to replace, at $60,000 a year (assumed) 5 years: $300,000 3 years: $180,000 1 year: $60,000
Savings you could draw on (assumed) $80,000 $150,000 $300,000
Shortfall a payout would need to cover $685,000 $315,000 nil

In this example the shortfall shrinks as the mortgage runs down and savings grow. The funeral figure is near the FDANZ average of $14,300 for a full funeral with burial for 50 guests (FDANZ 2026 report). Your own numbers will differ, and the number of years of income to replace is a judgement for your household.

What does it cost, and how does that compare?

These are indicative monthly costs for $500,000 of life cover, non-smoker, stepped premiums, occupation class 1, standard rates, shown as a range across the insurers that priced each row, from insurers' published rate cards as at 8 September 2026 (see the Premium Index method; rate cards from insurers such as AIA and Fidelity Life). Your own premium depends on underwriting. Compared: AIA, Asteron Life, Chubb Life, Fidelity Life and Partners Life for $500,000 life cover, on monthly cost, as at 8 September 2026, from published rate cards. Not every New Zealand insurer is included. This is one adviser's reading, not a score.

Age Man, monthly Woman, monthly Man, yearly (monthly x 12)
30 $30 to $40 $20 to $30 $360 to $480
40 $40 to $50 $35 to $40 $480 to $600
50 $90 to $120 $80 to $100 $1,080 to $1,440
60 $300 to $375 $225 to $275 $3,600 to $4,500
65 $625 to $725 $400 to $475 $7,500 to $8,700

Put the two tables side by side. In the assumed household the shortfall at 40 is $685,000, and $500,000 of cover for a 40-year-old man is in the $40 to $50 monthly band on the rate cards in the table above. By 60 the assumed shortfall is nil, while the same $500,000 sits in the $300 to $375 monthly band. That is the pattern that makes people ask whether cover is a waste of money: they are paying the most when they need it least. It is also why some people reduce cover as debts fall. Premiums do not scale in a straight line with the amount, so cover reduced to the remaining need costs less, but not in exact proportion.

Smoking, health and occupation change all of these. Staying nicotine-free for 12 months before applying would save about 33 to 57 percent a month at most ages on the same snapshot, and our life insurance cost page covers what drives the price.

When life insurance is often worth it

When it may not be worth it

"May not be" is not a promise. The FMA also suggests checking whether another product already covers you, and reviewing after big changes such as marriage, buying a home, having children, changing jobs or paying off a mortgage.

What buying earlier does and does not do

A stepped premium is re-priced each year, so buying young does not lock in a low rate. What buying earlier can keep is your chance of being accepted on today's health. Asteron says that when an applicant has an existing condition it can often still offer cover by adding a stand-down period, raising the premium or excluding the condition (Asteron). Level premiums are an alternative to stepped ones; see level premium life insurance in NZ. Cheaper at first can be dearer later: the FMA says "policies that are cheaper initially can be more expensive long-term".

Keep, reduce or cancel?

Your situation What it points to
Debt is shrinking and savings are growing Ask whether you can reduce the sum insured
A dependant still relies on your income Keep it, and check the amount against the shortfall
You want to replace the policy Keep the old one running until the new one is in force (FMA); watch new waiting periods and exclusions
You are thinking of cancelling because of price Look at a lower amount or a different premium structure first

Read cancelling or changing life insurance before you act. Always answer an insurer's health questions completely: IFSO case notes show insurers avoiding or reducing claims for non-disclosure (IFSO).

If the need is only a funeral

A smaller need has a smaller answer. A funeral can be paid from savings, a prepaid plan, or a funeral policy. Momentum Life's Funeral Insurance pays a fixed benefit of $3,000 to $30,000 towards costs, for ages 40 to 75, with acceptance guaranteed. In the first 24 months it pays only for accidental death; any other death in that window pays no benefit and all 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 for that decision.

Where Momentum Life fits

Quick Life is Momentum Life's guaranteed acceptance life cover for ages 18 to 65, with $50,000 to $300,000 of cover. It asks no health questions, but in the first 2 years it excludes pre-existing conditions and suicide, and it pays on accidental death, death from any cause after the first 2 years and terminal illness. A healthy person can usually get more cover for less with fully underwritten cover through an adviser, so it suits people who would be declined or loaded elsewhere, or who want cover in place without questions. See Quick Life. Momentum Life's A.M. Best rating is B (Fair); see Momentum's financial strength page.

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 through our link; see how we are paid. This is general information, not personal advice.

Frequently asked questions

Is life insurance a waste of money if I never claim?

Not if the cover did its job while you held it: the premium bought protection against a loss that did not happen. It is poor value if nobody would have been affected.

Is life insurance worth it with no kids?

It depends on other dependants and debts. A partner who shares your mortgage or relies on your income is a reason to consider it. With neither, savings may do the job.

Is life insurance worth it for a young single person?

Often the need is small, apart from shared debts. The case for it is mainly keeping your options open if your health changes, and that has a cost.

Is life insurance worth it after 60?

Check the shortfall first. The table shows cost climbing quickly, while debts and dependants often fall. See life insurance over 60.

References

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