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

Life insurance basics for beginners in NZ

Life insurance is a contract that pays a lump sum when the person insured dies, and with many policies when they are diagnosed with a terminal illness. Yes, you can take out a policy on your own life. Beginners usually choose between underwritten cover, where the insurer asks about your health first, and guaranteed acceptance cover, which asks no health questions but restricts the first two years.

In short

What is life insurance and how does it work?

Life insurance is a contract in which an insurer pays an agreed sum, the sum insured, when the person insured dies, in return for regular premiums. Three roles are worth knowing. The life insured is the person whose death triggers the payment. The policy owner controls the policy and pays the premiums; for most people that is also themselves. The beneficiary is who receives the money. With Momentum's Quick Life the benefit is paid to the owner or the nominated beneficiary, and if no beneficiary is listed or they have died, to the owner's estate. Many policies also pay early if the insured is diagnosed with a terminal illness (Sorted); Quick Life, for example, defines it as an illness expected to lead to death within 12 months. The sum is a payment to your family or estate. It is not an investment: some older policies had a savings component, and Sorted says today it is regarded as simpler to keep life insurance and savings separate (Sorted).

Can I buy life insurance on myself?

Yes. You can be the life insured, the owner and the person who applies. Quick Life's wording says the life insured is usually the policy owner unless ownership is formally transferred. You can apply alone, or with a partner for joint cover, which on Quick Life carries a $50 a year discount. Cover on someone else, such as a spouse or a parent, has extra rules about consent and ownership; see our pages on life insurance for a spouse and for parents.

You can buy in three ways. A licensed adviser can compare insurers and handle underwriting. You can go direct to an insurer. Or you can use a comparison or partner site such as QuoteHub, which leads to an insurer's own application. The FMA says most insurance advisers are paid commission by the insurer, built into the premium, and must disclose how much (FMA). Our guide to insurance for beginners covers the other types of personal cover, such as income protection and trauma.

Underwritten or guaranteed acceptance: the main choice

Underwriting is the insurer's assessment of the risk you present. It decides whether to accept you and on what terms. The two routes are:

Underwritten cover Guaranteed acceptance cover
Health questions Yes; more evidence as the amount and age rise None
Who it can suit People who expect to be accepted, and who want higher amounts People declined or loaded elsewhere, or who want cover without questions
Example entry ages Fidelity Life 16 to 75; Chubb Life and AIA 10 to 70 Momentum Quick Life 18 to 65
Amounts Large; Chubb Life states no maximum for life cover, subject to assessment Quick Life $50,000 to $300,000, rising 3% a year to a $500,000 cap per person
Early restrictions Mainly suicide in the first 13 months (Fidelity Life, Chubb Life) First 2 years: pre-existing conditions and suicide excluded
Terms Standard, loaded, excluded, postponed or declined, set for you No individual acceptance decision

For non-medical limits, Fidelity Life and Chubb Life both need only an application form or personal statement up to $500,000 at every age band, with a medical from $500,001 for ages 61 and over; disclosed conditions trigger more (Chubb Life, Fidelity Life). A healthy person can usually get more cover for less with underwritten cover through an adviser. Guaranteed acceptance means no health questions at application but restricts the first two years. Both approaches restrict the early period in some way, so read the wording. Details of the limits are on our page about life insurance exclusions.

Not everything is life cover. Funeral insurance is a separate, smaller product. Momentum's Funeral Insurance is for ages 40 to 75 with benefits of $3,000 to $30,000, and in the first 24 months it pays only for accidental death. Premiums can add up to more than the benefit. See what funeral insurance is.

How do premiums work?

A stepped premium is re-set every year for your age, so it starts lower and rises. A level premium starts higher and is fixed for a period or term. Fidelity Life describes Yearly Renewable Term as rising each year and Level Term as starting "a bit higher" and staying the same for the term; Asteron describes level premiums as locking payments in "so they don't increase with age" (Fidelity Life, Asteron). Quick Life premiums are stepped to age 75 and then fixed. Our page on stepped and level premiums goes further, and we do not quote a crossover age because none is published.

Indicative monthly cost from insurers' published rate cards as at 8 September 2026, for $500,000 of cover, non-smoker, occupation class 1, standard rates, stepped, as a range across the insurers that priced each row:

Age Man Woman
30 $30 to $40 $20 to $30
40 $40 to $50 $35 to $40
50 $90 to $120 $80 to $100

Your own premium depends on underwriting: health, smoking, job and the insurer. These are ranges from QuoteHub's Premium Index, not quotes; the methodology explains how they are built. Check any insurer's current terms on its own page, for example Fidelity Life's life cover page. Smoking raises the price sharply. For smokers the same $500,000 at 30 ranges from $50 to $80 for a man and $35 to $45 for a woman.

How much cover do you actually need?

Sorted's starting point is that if people depend on you financially, you need insurance to protect them: your partner and children can be left in difficulty when your income stops, and insurance can allow your family to pay off the mortgage and cover extra costs like childcare (Sorted). Add up three things:

  1. Debts that would still need paying, such as a mortgage or personal loans.
  2. Income your household would lose, and for how long.
  3. The cost of a funeral. FDANZ's 2026 report gives an average of $11,700 for a full funeral with cremation for 50 guests, and $14,300 with burial (FDANZ).

Then subtract what you already have, such as cash, other cover, or cover through work. Our longer guide on how much life insurance you need works through this.

A five-step path to a first application

This is a checklist, not advice about which product to choose.

Step 1: Who relies on you? If nobody depends on your income and you have no debts, you may need little or no life cover. If someone does, go on.

Step 2: What do you owe? Total the debts, with your household's expected expenses.

Step 3: What do your age and health point to? If you are healthy, both routes are open, and a healthy person can usually get more cover for less with underwritten cover through an adviser. If you expect to be declined or loaded, or want cover in place without health questions, read the guaranteed acceptance wording closely, including the first two years. Over 65, Quick Life is closed, so look at underwritten cover, or funeral insurance if you are 75 or under.

Your situation What to check first
Healthy, with a mortgage and a partner Underwritten quotes from several insurers, via an adviser or direct
Health issues, or declined before Guaranteed acceptance wording, especially the first 2 years, alongside an adviser's view
Small funeral-sized goal, aged 40 to 75 Funeral insurance, and saving as an alternative
Aged 66 or over Underwritten cover, if any; see life insurance over 75

Step 4: Compare wordings, not just prices. Look at the early restrictions, the exclusions, whether premiums are stepped or level, and the insurer's financial strength rating, named with its agency.

Step 5: Apply honestly, then tell your family. Sorted says you must give all the information the insurer asks for, because leaving important information out could risk future claims being turned down (Sorted: About insurance). Tell your family what cover you hold, so they know to claim. Quick Life has a 30-day free look from the policy start date with a full refund if no claim has been made. When replacing cover, keep the old policy running until the new one starts, since a new policy can bring new waiting periods and exclusions (FMA).

Quick Life's wording says you can apply alone or with a partner and that acceptance does not depend on your health; Momentum's site adds that it is not available to applicants diagnosed with a terminal illness or in palliative or hospice care. In the first two years a pre-existing condition or suicide is excluded, premiums are refunded if death is from a pre-existing condition and no claim is payable, and some causes are excluded permanently. The buttons on this page lead to Momentum's own application for either product; compare other options as well. See the Quick Life page and the guaranteed acceptance guide.

Advice is provided by Craig Smith Business Services Limited, trading as Smiths Insurance & KiwiSaver, a licensed Financial Advice Provider (FSP712931). This page 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 Limited has an A.M. Best rating of B (Fair), in A.M. Best's "Vulnerable" range (Momentum's financial strength page). Last reviewed 20 October 2026.

Frequently asked questions

Can I take out a life insurance policy on myself?

Yes. You can be the life insured and the owner. You apply through an adviser or direct to the insurer.

Do I need a medical to get life insurance?

Not always. Fidelity Life and Chubb Life need only an application form or personal statement up to $500,000 at most ages, and more evidence if your answers or the amount call for it. Quick Life has no health questions or medical exam.

Is the payout taxable?

Inland Revenue says insurance payouts are generally excluded income, while income protection payouts are generally taxable. Ask your accountant about your own situation.

When does cover start?

Quick Life's cover begins on the acceptance date in your policy schedule. Other insurers set their own start dates, so check your documents.

References

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