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

Common mistakes with seniors life insurance

The first thing to test with seniors life insurance in New Zealand is whether total premiums will pass the benefit. Other mistakes are overlooking stepped premium rises, misreading the early-death window, and cancelling old cover before new cover starts. Each is avoidable by reading the policy wording before you pay.

In short

A seniors life insurance mistake is a choice that leaves the policy doing less than the buyer assumed, or costing more over time than the benefit is worth to them. Most of them come from two facts. First, guaranteed-acceptance policies trade questions for limits: Momentum's Funeral Insurance pays only for accidental death in the first 24 months, and Quick Life excludes pre-existing conditions and suicide for the first 2 years. Second, the money you pay is not stored for you. Quick Life's wording says it builds no cash or surrender value, and on either product cancelling after the 30-day free look returns no premiums. This page lists seven mistakes, gives you a break-even table to test the first one, and ends with questions to ask. It is general information, so use it to prepare for a conversation with a licensed adviser rather than to decide.

Mistake 1: paying more in total than the policy pays out

Premiums on a funeral policy can run for decades. Momentum's Funeral Insurance wording says total premiums "could exceed the Benefit" and the benefit "may not cover the cost" of a funeral. The Insurance and Financial Services Ombudsman (IFSO) published a case of a 2010 policy of $20,000 with premiums to age 90 where the buyer had no warning that premiums could pass the sum insured; the insurer refunded all premiums, and IFSO's summary says "It is not a savings product" (IFSO). That was one complaint, not a rule, but it shows why the test below matters.

Break-even is the benefit divided by what you pay in a year. The table uses round example premiums, not any insurer's price: Momentum publishes no funeral premium, and your own premium depends on your age, the amount and the insurer.

Benefit If you pay $300 a year $600 a year $900 a year $1,200 a year
$5,000 16.7 years 8.3 years 5.6 years 4.2 years
$10,000 33.3 years 16.7 years 11.1 years 8.3 years
$15,000 50 years 25 years 16.7 years 12.5 years

Illustrative arithmetic only. Read across: at $600 a year, a $10,000 benefit is overtaken after about 16.7 years. Momentum's Funeral Insurance premiums stop at the 89th birthday, so someone who starts at 70 would pay for at most 19 years, about $11,400 at that example price, and could finish having paid more than the $10,000 benefit. Someone who dies in year 8 would have paid about $4,800. Which outcome you get is not known in advance. Use the funeral insurance break-even calculator with a real quote, and read is funeral insurance worth it for the saving alternative.

Mistake 2: forgetting that premiums step up

The FMA says most premiums rise each year with age or inflation, and that a policy that is cheaper at first can cost more over time (FMA). Quick Life premiums are recalculated each anniversary for age, gender and smoking status, "generally increase each year", and are fixed from 75. On a fixed pension a step that is easy at 62 can be hard at 74. The same applies to "level" pricing, which can convert to a rate for age later; our cost guide sets out one Ombudsman case. Ask for the premium schedule, not just this year's figure. See stepped versus level premiums.

Mistake 3: choosing guaranteed acceptance without asking what underwritten would offer

Guaranteed acceptance suits people who would be declined or heavily loaded elsewhere. A healthy person can usually get more cover for less with fully underwritten cover through an adviser. A person with an existing condition may still be offered underwritten cover on different terms, and the options page has an insurer's own description of how. The reverse mistake is as costly: on underwritten cover, leave out a condition and the insurer may reduce or avoid a claim, as IFSO's published non-disclosure cases show (IFSO). Age limits also apply; see seniors life insurance options.

Mistake 4: reading the early window the wrong way

Not every guaranteed-acceptance funeral policy has a 24-month window. NZ Seniors and OneChoice use 12 months with no premium refund for another cause, where AA Life, Chubb Life and Momentum's Funeral Insurance use 24 months and refund (NZ Seniors; insurers' own pages, retrieved 20 October 2026). The mistake is to assume the windows work alike; compare what each pays and refunds inside it. Quick Life is a different design: it covers accidents and new conditions from the start but excludes pre-existing conditions for 2 years, and its wording names markers such as a BMI over 40, cholesterol over 7.0, very high blood pressure and complications of diabetes. Our refund guide shows what comes back in each case, and funeral insurance waiting periods covers the funeral version.

Mistake 5: assuming the benefit pays the funeral director

A funeral policy pays a fixed benefit, and the benefit may not match the bill. FDANZ's 2026 report gives an average of $11,700 for a full funeral for 50 guests with cremation and $14,300 with burial (FDANZ). Momentum's Funeral Insurance wording says a beneficiary must be a natural person and that Momentum cannot pay a benefit directly to a company, charity or other organisation, so a funeral director cannot be named as the beneficiary. Payment is "usually within 24 - 48 hours of approval", and the clock starts at approval, not at the death.

Mistake 6: cancelling the old policy first

The FMA's advice is to keep your old policy running until the new one is in force, because a new policy can bring a new qualifying period, different cover or exclusions for existing health problems (FMA). Read cancelling or changing life insurance before you act.

Mistake 7: letting payments lapse

Momentum can cancel a policy that is unpaid for over a month. Funeral Insurance reinstatement is by application and "not guaranteed", and paying late does not automatically reinstate Quick Life. Re-applying for Quick Life restarts its two-year period. Set up a payment method you can keep up on a pension date; see missed life insurance premiums.

Does life insurance pay for death from old age?

Cover that pays for death from any cause pays for death from old age. Momentum's Funeral Insurance does so after the first 24 months, and Quick Life after the first 2 years, in both cases with the wording's exclusions. What can stop that is cover that ends before you do. A term policy has an expiry date, while Fidelity Life says its life cover has no expiry age and Chubb says Assurance Extra Life Cover never expires. Ask any insurer what age cover ends.

Questions to take to your adviser or review

For wider planning see insurance for retirees and the Momentum Funeral Cover page.

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 (how we are paid; disclosure). Momentum Life Limited holds an A.M. Best rating of B (Fair), affirmed 11 February 2026, in what Momentum's own table calls the "Vulnerable" range (Momentum); a rating is an opinion, not a recommendation. This page was written by the QuoteHub Editorial Team and last updated on 20 October 2026. The buttons on this page open Momentum's own online quote.

Frequently asked questions

Does life insurance cover death from old age?

Yes, when the policy pays for death from any cause and has not ended. Momentum's Funeral Insurance pays after 24 months and Quick Life after 2 years.

Is a senior life insurance policy a costly mistake?

It can be if total premiums pass the benefit or if premiums step up beyond what you can pay. Test it with the break-even table and a real quote.

Do I get my premiums back if I cancel?

Not after the free look. Momentum's free look is 30 days (from acceptance for Funeral Insurance, from policy start for Quick Life), and later cancellation does not refund premiums paid.

References

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