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

Questions to ask before choosing life insurance

Before you sign for life insurance in New Zealand, ask whether the policy is fully underwritten or guaranteed acceptance, whether premiums are stepped or level, what is excluded and for how long, who rates the insurer and at what grade, how the adviser or website is paid, and how claims work. Ask for the answers in writing. The table below turns each into a question you can take to a meeting.

In short

Essential questions to ask before buying any life insurance policy in NZ

Take this table to your adviser, or use it while you read an online quote. The sections after it explain each row.

# Ask A useful answer looks like
1 Is this underwritten, or guaranteed acceptance? Names the type, and what happens in the first two years
2 Are premiums stepped or level? States how the premium changes and who can change the rate
3 What is excluded, and for how long? A written list, with periods
4 What counts as terminal illness, and what is paid? A definition with a time limit and the amount
5 Who is the insurer, who rates it, and what grade? Names the agency and the grade, with the date
6 What must I disclose? Says what you must tell the insurer and what happens if you leave something out
7 How is the adviser or website paid? A figure or a clear method, in writing
8 Who owns the policy, and who gets paid? Names the owner and a nominated beneficiary
9 What happens if I miss a payment? A grace period or cancellation rule
10 Can I cancel, and what is refunded? A free-look period and the refund rule
11 How do claims work, and who helps? Contact route, timing and complaints scheme
12 Is a different type of cover better for what I need? Compares at least two options

Is the policy fully underwritten or guaranteed acceptance?

Fully underwritten cover asks health questions and may need records or tests. The insurer then accepts, loads the price, excludes something or declines. Guaranteed acceptance asks no health questions and accepts everyone who meets the eligibility rules, but restricts the early years.

The insurers publish evidence thresholds. Fidelity and Chubb need only an application form or personal statement for life cover up to $500,000 at every age band, and require more evidence from $500,001 at age 61 and over (Chubb underwriting guide, May 2025; Fidelity underwriting guide, October 2025). These are minimums, and a health condition you disclose can trigger more.

Momentum's Quick Life is guaranteed acceptance for ages 18 to 65 with no health questions or medical exam, cover of $50,000 to $300,000, and a 2-year exclusion for pre-existing conditions and suicide. Pre-existing includes conditions such as a BMI over 40, cholesterol over 7.0, very high blood pressure and diabetes complications (Quick Life wording). A healthy person can usually get more cover for less with fully underwritten cover through an adviser. See guaranteed acceptance versus full medical.

Are premiums stepped or level?

A stepped premium is recalculated each year. A level premium is fixed for a chosen period, then may convert. Fidelity says Level Term starts "a bit higher" and stays the same, while Yearly Renewable Term rises with age (Fidelity: Life cover). AIA's Level for 10 years, to 65 or to 80 converts to Rate for Age at the end of the period (AIA wording).

Ask when a level premium stops being level. In an IFSO case, a "Level to age 80" policy converted to Rate for Age at 80 and the monthly premium went from $49 to $190; the complaint was not upheld (IFSO).

Also ask who can change the rate. AIA guarantees the underlying rates for Life Cover, subject to changes in taxation or legislation. Momentum can change premiums for everyone on a plan for a change in tax or other law, or for claims experience significantly different from expected, on 30 days' written notice. See stepped versus level and what drives premiums.

What exclusions apply to health, jobs or pastimes?

Ask for the exclusions in writing, with the length of each. Examples from the documents:

For Momentum's Funeral Insurance (ages 40 to 75), the early rule is a 24-month window in which only accidental death is paid; other deaths refund all premiums. Total premiums can exceed the benefit, and the benefit may not cover the whole funeral. See our exclusions guide.

How does the policy define terminal illness?

Ask for the definition and the time limit. Quick Life pays on terminal illness expected to lead to death within 12 months, confirmed by an approved practitioner, and the payment ends cover. Funeral Insurance has no terminal illness benefit. Do not assume the same definition from one policy to another.

What is the insurer's financial strength rating, and who issued it?

A rating is an opinion of one agency. A.M. Best says its rating "is not a recommendation to purchase, hold or terminate any insurance policy" (A.M. Best: Guide to Best's Financial Strength Ratings). The same letter differs by agency: B is "Fair" at A.M. Best but "Weak" on the S&P scale as Southern Cross prints it. Always name the agency and its word.

As an example, Momentum Life Limited is rated B (Fair) by A.M. Best, affirmed on 11 February 2026, and its own table groups B in a "Vulnerable" range. It reported a solvency ratio of 107% at 30 June 2026 (Momentum: Financial strength). Solvency figures from different insurers are not comparable on size, so do not rank them. See insurer financial strength ratings.

What do you have to disclose?

Today the law says policyholders must disclose material information, and IFSO cases show insurers avoiding or reducing claims when they did not (IFSO). From 15 November 2027 (not yet in force), the Contracts of Insurance Act 2024 changes this to a duty to take reasonable care not to make a misrepresentation, with remedies that depend on what the insurer would have done (FMA). Until it is in force, answer every question completely. Our guide to non-disclosure has more.

How does the adviser or broker get paid?

The FMA says most insurance advisers receive commission from the provider, as a percentage of your premium, and that advisers must disclose how much. Some charge a fee as well. If you cancel inside a clawback period, usually two years at some insurers, the adviser may repay part of the commission, and some pass that on (FMA: Insurance advice). Ask: how much, from whom, and what happens if I cancel.

Under the Code of Professional Conduct, an adviser must treat clients fairly, ensure you understand the advice, and manage conflicts (Code of Professional Conduct). 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 guide to how advisers get paid. Advice is provided by Craig Smith Business Services Limited, trading as Smiths Insurance & KiwiSaver, a licensed Financial Advice Provider (FSP712931). For a bank versus an adviser, see bank cover versus a broker.

Who owns the policy and who is paid?

The life insured need not be the owner. Ask who owns it, who can change the beneficiary, and what happens on the owner's death. Momentum pays the owner or the nominated beneficiary, and only the owner can change a nominated beneficiary. See who gets the payout.

What happens if you miss a payment, or want to cancel?

AIA gives 30 days' grace. Momentum can cancel when premiums stay unpaid for over a month. Free-look periods are contractual: AIA allows 15 days from receiving the policy document, and Momentum 30 days. We found no statutory cooling-off right. If you are replacing cover, the FMA says to keep the old policy running until the new one is in force.

What is the claims process, and who helps your family?

Ask which numbers to call and what forms are used. Momentum's wordings say Funeral Insurance claims are usually paid within 24 to 48 hours of approval and Quick Life claims within 48 hours, and approval starts the clock, not the death. Claims statistics are not defined the same way across insurers, so do not rank insurers on them. If you disagree with a decision, every business offering retail financial services must belong to an approved dispute resolution scheme, such as IFSO (FMA: disputes).

Is a different type of cover better for what you need?

Ask the adviser to compare at least two options, and say why they prefer one. Cover for a mortgage may differ from cover for a funeral. For funeral costs, see funeral insurance; for the cost of life cover, see the Premium Index.

References

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