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

What happens if you die without life insurance in NZ?

If you die without life insurance in New Zealand, the first place debts in your sole name are paid from is your estate, not your relatives. Funeral costs, other debts and tax are settled from the estate's assets before anything reaches beneficiaries. Joint property and joint debts are treated differently. What the absence of cover changes is the cash available at the start: the family has only the estate, any joint accounts, whatever savings they hold, and the support the government pays in particular cases.

In short

What happens when someone dies without cover

Here is the order in which things usually run. It is general information, not legal advice; a lawyer or trustee company can help with anything contested or unusual.

Step What happens Source
1 The death is registered and death certificates are ordered. Registering is free; an official certificate costs $35 govt.nz
2 The funeral is arranged. The executor has the final say on burial or cremation Community Law
3 The executor gathers the assets. Probate, a High Court order, is sought if banks or the land registry need it; the fee is $275 Ministry of Justice
4 Debts and costs are paid from the estate Administration Act
5 What remains goes under the will, or under the intestacy rules if there is no will Administration Act s 77

Jointly owned assets sit outside this flow. A joint bank account passes to the other owner immediately and in full and is not part of the estate. For joint tenants, the survivor becomes sole owner (a lawyer transfers the title). A tenants-in-common share goes to the estate (Community Law). Our guide to probate covers timing, and does life insurance go through probate covers what happens when there is cover.

Who pays the mortgage and other debts?

Debts in the deceased's name alone are paid from the estate. Contract debts rank equally, and secured creditors are paid primarily from the property they hold security over (Administration Act ss 33 and 34). If the estate cannot pay everyone in full, a priority order applies: administration costs first, then reasonable funeral expenses, then medical and hospital expenses from the last three months, then other claims (s 31, using Insolvency Act 2006 priorities). Funeral expenses rank second, not first.

For a family home, this means the lender's security matters more than who inherits. Whether a family can keep the home depends on the lender, the terms and what the household can afford without the person who died. Joint borrowers are in a different position from a sole borrower, so check the loan documents and speak to the lender early. Our guide to life insurance with a home loan looks at cover and mortgages.

KiwiSaver savings do not go to a named beneficiary. On a member's death the manager pays the balance to the estate on application by the personal representative, or, if the amount is small enough, under the small-payment rule in section 65 of the Administration Act (Schedule 1, clause 9 of the governing Act), so it is handled with the other estate assets: see what is in a deceased estate.

How funeral costs are handled

Someone has to pay the funeral director first, and a person who pays can claim the cost back from the estate (see claiming funeral expenses from the estate). FDANZ's 2026 industry report gives an average of $11,700 for a full cremation funeral for 50 guests at a funeral home and $14,300 with burial, and $4,700 for an unattended cremation. FDANZ also found that 74% of deaths had no pre-arrangement or pre-payment (FDANZ 2026 Industry Trends Report). A bank can release money from the deceased's account for the funeral without the person arranging it being executor or waiting for probate.

Two sources of money can help with the funeral itself:

The grant is small next to the cost: $2,697.43 is about 23% of FDANZ's $11,700 average. Our paying for a funeral guide goes through the options.

Household income after a death

Work and Income payments to someone who has died stop when it is told, though they may continue for up to 28 days in some cases. With a partner or dependent children, payments run for 28 days unless the partner receives an ACC survivor's grant (Work and Income: payments when a client dies). Work and Income's bereavement page names the funeral grant, travel help and ACC support, and no general bereavement lump sum.

For children, an Orphan's Benefit applies only if each parent is dead, missing or has a long-term serious disablement. Weekly rates from 1 April 2026 run from $301.53 for a child under 5 to $350.58 from age 14 (Work and Income: Orphan's Benefit). A surviving parent does not trigger it. Employees may get bereavement leave: 3 days for the death of a spouse or partner, parent, child, sibling, grandparent, grandchild or a partner's parent, and 1 day where the employer accepts another bereavement (Employment NZ).

The gap that remains is ongoing income. If a household depends on one pay packet, none of the support above replaces it. That is the specific job life insurance does, and it is also the test of whether you need it.

If there is no will

The Administration Act's rules decide who inherits. A partner with no children and no surviving parent of the deceased takes the chattels, a prescribed sum of $155,000 plus interest, and the rest of the estate; with children, the partner takes the chattels, the prescribed sum, and one third of the rest, with two thirds held for the children (Community Law). Family members such as a partner or children who think adequate provision was not made for them can apply under the Family Protection Act within 12 months of the grant (Family Protection Act 1955, s 9). See dying without a will.

When going without life insurance is a reasonable choice

It can be, if all of these hold:

For people who do not fit that, the options include underwritten cover through an adviser, guaranteed-acceptance cover, or saving. Momentum Life's Quick Life takes ages 18 to 65, asks no health questions and covers $50,000 to $300,000, but in the first 2 years it excludes pre-existing conditions and suicide. Its Funeral Insurance (ages 40 to 75) pays only for accidental death in the first 24 months (death within 90 days of the accident), all premiums paid are refunded for any other death in that window, total premiums can exceed the benefit, and the benefit may not cover the whole funeral. Setting aside the same money in an account is the other way to prepare; see is funeral insurance worth it.

Momentum Life's A.M. Best rating is B (Fair), in the "Vulnerable" range, and is an opinion, not a recommendation (financial strength page). For all options see the guaranteed acceptance hub; the buttons on this page start a Momentum Life online quote, if guaranteed acceptance is what you want.

How to assess your own need

  1. List debts that someone would have to keep paying: the mortgage, loans, cards.
  2. Estimate what a funeral would cost, using the sourced figures above.
  3. Write down how many months of household bills would need to be covered if your income stopped.
  4. Add the assets that could meet those: savings and anything held jointly.
  5. The gap, if any, is the figure to size cover against. If there is none, you may not need cover.

See how much life insurance you need for sizing, and do I need life insurance without a mortgage for the no-debt case.

Who we are and how we are paid

Financial 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 legal or financial advice. QuoteHub is a Momentum Life partner. Smiths Insurance & KiwiSaver may receive a commission if you buy through our link; see how we are paid and our disclosure.

References

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