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

Surrender value and cash value in NZ life insurance

A surrender value is the cash an insurer pays you if you cancel a policy that has built up savings. Momentum Life's Quick Life wording says the policy "does not build up any cash or surrender value", and AIA's wording for its Living policies says there is no surrender value. If you cancel a term policy or one of Momentum's guaranteed-acceptance policies, the cover ends and you get nothing back, apart from a refund inside the free-look period.

In short

Do NZ life insurance policies have a surrender value?

The policy documents we read say they do not. Here is what each one says.

We have not surveyed every insurer's range, so we cannot say that no NZ product builds a cash value. Our whole life insurance page and the term versus whole life comparison set out the difference between the cover types, and the policy schedule or the insurer will tell you whether yours has one.

Why term life has zero cash value

Term cover is priced to pay if the insured event happens in the period you are covered, and you pay each year for that risk. Stepped premiums are re-set each year for age and, with Quick Life, for gender and smoking status, which means the premium you paid last year bought last year's cover (Momentum Life: Quick Life wording). Nothing is set aside for you. When you stop paying, the cover stops.

What happens if you cancel Momentum Quick Life?

Situation What you get back
Cancel within the 30-day free look, no claim made Full refund of premiums
Cancel after 30 days No refund of premiums paid; you can cancel at any time on 30 days' notice
Re-apply later after cancelling New cover starts a fresh 2-year period in which pre-existing conditions and suicide are excluded
Death from a pre-existing condition in the first 24 months, no claim payable Premiums refunded
True age at start was over 65 Policy void from the start, all premiums refunded

Source: Quick Life wording (the free-look, cancelling, correcting mistakes in age and exclusions sections). The 2-year rule also restarts on reinstatement, and an increase restarts it for the increase only, unless it is an automatic 3% increase. Terminal illness is a different case: when a terminal illness benefit is paid, the cover for that person ends.

Quick Life is for people aged 18 to 65 and pays a lump sum from $50,000 to $300,000 on accidental death, death from any cause after the first 2 years, or terminal illness. Pre-existing conditions and suicide are excluded for the first 2 years. See the Quick Life page for the full list.

What happens if you cancel Momentum Funeral Insurance?

The Funeral Insurance wording gives a 30-day free look from the acceptance date, with a full refund if no claim has been made. After that you can cancel at any time by calling or sending a signed cancellation letter and giving 30 days' notice, but the premiums paid are not refunded and you would need to reapply for cover if you changed your mind. Its first 24 months pay only for accidental death. If the person insured dies of anything else in that time, all premiums paid for that person are refunded. That refund is a claim-time outcome and cannot be taken out while you are alive.

Surrender values in older whole of life policies

An older policy may be an endowment or whole of life policy rather than a term one. We have no sourced formula for how NZ insurers calculated those values, so we do not describe one. What to do is simple:

  1. Find the policy schedule or the last annual statement.
  2. Look for a line headed surrender value, cash value, bonus or maturity value.
  3. Ask the insurer in writing for the current surrender figure and what the policy would pay on death. These can differ greatly.
  4. Ask a licensed adviser to read both numbers before you decide.

If the schedule shows no such line, treat the policy as a protection-only policy with no cash value.

Alternatives to cancelling your life insurance

Cancelling is the one step you cannot undo, since new cover would have to be bought at your current age and health. Before you stop paying, consider:

Whatever you decide, the new insurer sees your full history if you apply again (IFSO).

Is the money back taxable?

We can say little. Inland Revenue's page on insurance payouts says "Generally, insurance payouts are excluded income" and goes on to discuss income protection and personal sickness insurance; it does not discuss cashing in a life policy (Inland Revenue). If you hold a policy with a surrender value, ask Inland Revenue or an accountant before you cash it in. See also life insurance and tax in NZ.

Where Momentum fits

If you are weighing up Momentum, note that A.M. Best rates Momentum Life Limited B (Fair), a grade that Momentum's own table places in its "vulnerable" group (affirmed 11 February 2026). The rating is not a recommendation; the detail is on Momentum's financial strength page. Guaranteed acceptance suits people who might be declined or loaded elsewhere, or who want cover with no health questions. A healthy person can usually get more cover for less with fully underwritten cover through an adviser. The buttons on this page lead to Momentum's online quote for Quick Life and Funeral Insurance.

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 advice. QuoteHub is a Momentum Life partner, and Smiths Insurance & KiwiSaver may receive a commission on Momentum products; see how we are paid. Last reviewed 20 October 2026.

Frequently asked questions

Does term life insurance have a cash value?

No. A term policy pays only if the insured event happens during the cover. If you cancel, the cover ends and no savings balance is paid out.

Does Momentum Quick Life have a surrender value?

No. The wording says it is a protection policy only and does not build up any cash or surrender value.

Can I get my premiums back if I cancel?

Only inside the free-look period, which is 30 days for Momentum policies and 15 days from receiving the policy for AIA.

Is a premium refund the same as a surrender value?

No. A refund of premiums on a death in the early window is paid on a claim, and it is not available to you while you are alive.

References

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