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

How life insurance benefits are paid in NZ

Most New Zealand life insurance pays a single lump sum when a claim is accepted. Momentum Life's Quick Life, for example, pays the benefit amount on the policy schedule. Chubb Life also sells Life Income Cover, which pays a monthly amount over a chosen term, and disability covers such as income protection pay monthly while you are alive.

In short

How a lump sum is paid

A lump sum is one payment of the sum insured, after the insurer accepts a claim. Momentum says that once a Quick Life claim is approved, payment is usually made within 48 hours, in New Zealand dollars (Momentum Life: Quick Life Insurance Policy Wording, November 2025). Its Funeral Insurance wording gives "usually within 24 - 48 hours of approval" for a fixed Funeral Insurance Benefit of $3,000 to $30,000, which pays in full only after the first 24 months unless death is accidental, and total premiums can exceed the benefit (Momentum Life: Funeral Insurance Policy Wording). Neither wording describes paying in instalments. Approval is a separate step that takes as long as the claim needs; see how long a life insurance claim takes.

Quick Life can also pay early. If a life insured has a terminal illness expected to lead to death within 12 months, confirmed by an approved practitioner, the benefit is paid and that person's cover ends. It is covered in terminal illness benefits.

Monthly and other formats

Format What triggers it Example from a published document
Lump sum on death or terminal illness Death, or a terminal illness diagnosis Momentum Quick Life; Chubb Life Cover
Monthly payment on death or terminal illness Death, or a diagnosis likely to lead to death within 12 months Chubb Life Income Cover, paid for a chosen 5 to 30 year term
Early partial payments A listed condition, or a death before the full claim is settled Chubb's advance terminal illness and Bereavement Support benefits, and Kiwibank's funeral expenses lump sum (amounts are on our payout amounts page)
Monthly while you are alive Illness or injury stops you working Income protection; monthly mortgage repayment cover, a disability product
Lump sum while you are alive A defined serious illness (trauma) or permanent disability Trauma and total and permanent disability covers

The last two rows are different products. Fidelity Life defines trauma cover as "a lump sum payment if the life insured suffers from a defined serious illness", total and permanent disability cover as a lump sum if "totally and permanently disabled", and income protection as a monthly benefit towards replacement income (Fidelity Life underwriting guide). They do not pay on death, so they are not a substitute for life cover. See life versus trauma insurance.

On Chubb's Life Income Cover, the monthly sum insured is paid for the selected term after a death. Its Bereavement Support Benefit brings forward up to one month's amount, to a maximum of $25,000, for funeral expenses, and the early payment is subtracted from the first month. Both Life Cover and Life Income Cover include a Financial and Legal Advice Benefit that reimburses up to $2,500 for advice on how to use the money (Chubb Life brochure CIG0009 V6). We found no other insurer in our files that publishes an instalment option for a death benefit, so ask an adviser what is on offer.

Lump sum or monthly: what to weigh

Neither format is better in the abstract. The question is what the money is for.

Quick Life is a lump sum of $50,000 to $300,000 per life insured to start, rising 3% a year to a $500,000 cap. In its first 2 years it excludes pre-existing conditions and suicide, and the sum may not match a long income need.

Who receives the money

The format does not decide who is paid; ownership does. On Quick Life, a claim for a deceased life insured is paid to the nominated beneficiary if there is one, otherwise to the policy owner or their estate, and only the owner can nominate or change a beneficiary (Momentum Life: Quick Life Insurance Policy Wording, November 2025).

If the money is payable to the estate, the amount matters. Under section 65 of the Administration Act 1969, a life insurer may, but need not, pay a sum of up to $40,000 (from 24 September 2025) to the people the section lists, such as a partner, children or a person entitled to administer, without a grant of probate, if they apply or consent; above that a High Court grant is normally needed (Administration Act 1969; SL 2025/158). Read probate in New Zealand, who gets a life insurance payout and unclaimed life insurance.

Tax and benefits

Inland Revenue says insurance payouts are generally excluded income. An income protection payout that replaces lost income is generally taxable (Inland Revenue: Insurance payouts). IRD's QB 18/04 says payments that replace income, or regular payments for living expenses, are likely to be income, and other lump sum payments unlikely to be (Inland Revenue QB 18/04). That item does not name Life Income Cover, so we cannot say how a monthly death benefit is taxed. Ask an accountant before relying on either answer, particularly for a monthly benefit or a company-owned policy. Our page on life insurance tax covers more, and a payout can affect some benefits; see whether a life insurance payout affects benefits.

If you have no cover

The alternative to a payout is meeting costs from savings or the estate. Our page on what happens if you do not have life insurance explains the options.

Who we are

General information, not advice. 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 and our disclosure. The buttons on this page open Momentum's own online application; see the Quick Life page. Momentum Life Limited's A.M. Best financial strength rating is B (Fair), affirmed 11 February 2026, and Momentum's own table puts B in its "Vulnerable" range (Momentum Life: Financial strength). A rating is an opinion, not a recommendation. Last reviewed 20 October 2026 against the sources below.

Frequently asked questions

Is life insurance paid out in a lump sum in NZ?

Usually yes. Momentum's Quick Life and Chubb Life's Life Cover pay a lump sum. Chubb's Life Income Cover is a monthly alternative.

Can a life insurance payout be paid in instalments?

Among the documents we read, only Chubb Life publishes a monthly death benefit. Momentum's wordings do not describe instalments.

Who gets the payout, the beneficiary or the estate?

The nominated beneficiary if there is one, otherwise the policy owner or their estate, under Momentum's wording. The terms of your own policy decide.

References

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