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

Do you still need life insurance in retirement?

Whether you need life insurance in retirement depends on who relies on you and what you owe. If the mortgage is paid, nobody depends on your income and savings can cover a funeral and the estate's first bills, cover is often optional. Debt, a partner who relies on your income or too little cash can change that. Do not cancel a policy before a licensed adviser has looked at it.

In short

The retirement test: four questions

1. Who relies on your income, pension or care? If you and a partner each receive NZ Super, your payment ends after your death. Work and Income says payments to a person who has died may continue for up to 28 days in some cases and then end (Work and Income). If your partner could not adjust to losing yours, that is the main reason to keep cover.

2. What debts would be left? Debts in your name alone are paid from your estate (Administration Act 1969, s 26; legislation.govt.nz). A mortgage, loan or credit card still outstanding at retirement is the clearest case for cover, and our guide to mortgage protection for older borrowers covers it. If the debts are paid, this question drops out.

3. Could savings pay for the funeral? FDANZ's 2026 report puts a full funeral for 50 guests at $11,700 for cremation and $14,300 for burial, with $4,700 for a cremation without a service (FDANZ). Compare that with cash you can reach fast. KiwiSaver savings are not paid to a named beneficiary: on a member's death the manager pays them to the personal representative as part of the estate, or under the small-payment route (2006 Act, Schedule 1 cl 9), so they are handled with the other estate assets. See what is in a deceased estate.

4. Can the estate pay its first bills without waiting for probate? Many banks and insurers may release money without a court order if the amount they hold is under $40,000 each (Ministry of Justice). A High Court order is usually needed if the estate includes land or a house. Probate has a $275 fee, plus legal costs. See probate in New Zealand.

Your answers What it suggests
Partner relies on your income, or debts remain Keep or review cover with an adviser
No dependants or debts, and savings exceed funeral and estate costs Cover is likely optional; self-insuring may do
No dependants or debts, but little cash for a funeral Funeral-only cover, a prepaid plan or a set-aside account
You hold a policy and wonder about cancelling Ask a licensed adviser before you change anything

A worked example (hypothetical)

Take a couple, both retired, no mortgage. Savings are $180,000 in the bank. The first to die would leave the other with one NZ Super payment and a modest household budget. The funeral could cost $14,300 for a burial. Savings cover that more than ten times over, so for the funeral and the first bills, life insurance adds little. The question that remains is the partner's income, and $180,000 of savings is a cushion for that. In this case, cover is probably optional.

Change one fact: there is $80,000 left on a mortgage and savings of $20,000. Now the funeral takes most of the cash, and a joint debt falls on the surviving partner. This household has a reason to look at cover for the debt. The numbers are invented to show the method; your adviser will use yours.

What to do with a policy you already hold

You can keep it, reduce it, or end it. Reducing the sum insured lowers the premium, because insurers set premiums on age, gender, smoker status and amount. Stepped premiums rise each year with age (FMA), so check the cost five years ahead. For the structure, see stepped versus level premiums.

Cover through an employer scheme is a separate case. Ask the scheme administrator whether it ends when you stop work and whether you can convert it to an individual policy. We found no rule that applies to every scheme.

Do not cancel before you have advice. A new policy is underwritten on your health and age at the time, the new insurer sees your full history (IFSO), and a new policy can bring new waiting periods and exclusions. The FMA says to keep the old policy running until the new one is in force. Read about term life insurance in retirement and how much cover seniors choose.

If you decide to buy: what is on offer

Cost rises sharply with age. QuoteHub's Premium Index shows indicative monthly costs for $500,000 of stepped, non-smoker cover at 65 of $625 to $725 for a man and $400 to $475 for a woman, from insurers' published rate cards as at 8 September 2026, class 1 occupation, standard rates. Your own premium depends on underwriting, and the Index stops at 65.

Momentum Life sells two guaranteed acceptance products, with no health questions. Both restrict the first two years.

Both are explained on Quick Life and Funeral Cover. Momentum Life's A.M. Best rating is B (Fair), affirmed on 11 February 2026; see its financial strength page. If you are over the age limits, read life insurance over 75; for ages 70 to 75, read life insurance over 70. A healthy retiree can often get more cover for less with fully underwritten cover through an adviser, if the insurer accepts them.

Tax and the estate

Insurance payouts are generally excluded income, not "tax-free" in every case (Inland Revenue). New Zealand has no inheritance tax (Estate Duty Abolition Act 1993). Who receives a payout depends on who owns the policy and whom it names.

Reviewing this with a licensed adviser

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. The buttons on this page start Momentum's online quote, and the age limits above apply. Our funeral insurance hub compares funeral options.

Frequently asked questions

Do most retirees have life insurance?

We found no reliable New Zealand figure and quote none. The answer for you depends on the test above.

What happens to my life insurance when I retire?

Nothing changes automatically if you own the policy and keep paying, but check the schedule for any expiry age. Employer-provided cover may end or change, so ask the scheme.

Is funeral cover enough in retirement?

For a household with no debt and no dependants, a small amount for the funeral may be all that is needed. Compare it with saving and a prepaid plan in is funeral insurance worth it.

References

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