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

When to reduce or stop life insurance in NZ

There is no age at which New Zealanders should stop paying for life insurance. The decision rests on what the cover is for: a debt someone else would have to carry, a person who relies on your income, or a gap your savings could not fill. Stepped premiums rise every year with age, so a sum insured that suited you at 40 can cost a great deal more at 65, and reducing the amount is often an option before cancelling.

In short

Four tests before you decide

1. Is the debt gone? Life cover is often bought against a mortgage. When the loan is paid off, or is small compared with your assets, one of the main reasons for the cover has fallen away. If a debt remains, the question is whether the person left behind could carry it. Our guide to life insurance with a home loan covers how cover relates to the loan.

2. Does anyone still depend on you? A partner who would lose your income, a child who is still at home, or a dependant with special needs are all reasons to keep some cover. If your children are independent and your partner has their own income and savings, the argument weakens.

3. Could your savings and assets meet what would fall due? That means the funeral, the final bills and the first months without your income. FDANZ's 2026 report gives an average of $11,700 for a full cremation funeral for 50 guests at a funeral home (FDANZ). If you could pay that and more without strain, the cover is doing less.

4. Is the premium still affordable and proportionate? Stepped premiums are re-priced each year for age. The Financial Markets Authority says cover that is cheaper at first can cost more over time, and that most premiums rise annually with age or inflation (FMA).

What stepped premiums do between 50 and 65

To see how fast a stepped premium climbs, take $500,000 of life cover for a non-smoker in occupation class 1 on standard rates. The ranges below run across the five insurers that priced each row (AIA, Asteron Life, Chubb Life, Fidelity Life and Partners Life), rounded outward, and come from rate cards published as at 8 September 2026. They are indicative only, not quotes, and what you would pay depends on underwriting. See Fidelity Life's life cover page for an insurer's own description of how its premiums move, and our methodology.

Age Typical monthly cost, man, $500,000 cover Typical monthly cost, woman, $500,000 cover
50 $90 to $120 $80 to $100
60 $300 to $375 $225 to $275
65 $625 to $725 $400 to $475

The cost of keeping the same cover rises several times over between 50 and 65. That does not mean you should cancel. It means the cover should be re-checked against the four tests rather than left running automatically. Level premiums behave differently: Fidelity says its Level Term starts "a bit higher" and stays the same for the term, and a conversion point can still change the price. In a published IFSO case, a policy that was "level to age 80" converted to rate-for-age and the monthly premium went from $49 to $190; the complaint was not upheld (IFSO). See stepped versus level premiums.

A decision matrix

This is a way to organise the tests, not a rule. The sums involved are yours to judge.

Debts Dependants Savings and assets Direction to consider
Mortgage or large loans remain Partner or children rely on your income Little spare cash Keep the cover, and check the amount still matches the debt
Debts mostly cleared Children independent, partner has own income Savings would cover the funeral and a few months Reduce the amount, or cancel after taking advice
Debts cleared None Comfortable Cancel, or keep a small amount only for funeral costs
Mortgage remains None who rely on you Some Ask whether anyone would have to carry the debt; if not, cover may be optional

Alternatives to cancelling

Reduce the sum insured. If a mortgage is partly repaid, ask your insurer whether the sum insured can be lowered, which lowers the premium. Check how, as the process and any effect on other benefits differ between policies.

Take a payment break. Fidelity lists a "payment break & suspend your cover" option for situations such as redundancy, going overseas for a while or study (Fidelity Life). Conditions apply, so ask your own insurer whether the option exists on your policy.

Move to funeral cover. For someone who wants money for final costs rather than income replacement, Momentum Life's Funeral Insurance takes ages 40 to 75 with benefits of $3,000 to $30,000. A new Funeral Insurance policy has a 24-month window in which only accidental death (within 90 days of the accident) is paid; for any other death in that window the benefit is not paid and the premiums paid for that person are refunded. Premiums are fixed each year until the 89th birthday, then stop, and total premiums can exceed the benefit, which may not cover the whole funeral. Setting money aside is the other way to prepare; use the funeral insurance break-even calculator and read is funeral insurance worth it.

Check what your policy does at 75. Momentum Life's Quick Life premiums are stepped to 75 and fixed afterwards, and at 75 $20,000 of the benefit becomes free; the policyholder can elect a free $20,000 funeral benefit or continue Quick Life with the free component. Policies differ, so read yours.

Momentum Life's A.M. Best financial strength rating is B (Fair), in the "Vulnerable" range (financial strength page). The rating is an opinion, not a recommendation.

When keeping cover past retirement still makes sense

Cover may still have a job if you still have a debt, if your partner's income or pension would fall sharply without yours, or if you want the estate to have cash so that assets such as a house do not have to be sold in a hurry. See estate planning and insurance for that angle. It is also worth keeping cover if you cannot get it back, which brings us to the main risk of cancelling.

What you give up by cancelling

A self-assessment checklist

  1. Write down what the cover was bought for.
  2. Check whether that debt, dependant or gap still exists.
  3. Look up the current premium and the sum insured on your latest policy schedule.
  4. Ask your insurer what reducing the amount would save.
  5. If you are thinking of replacing the policy with another, read switching life insurance first.
  6. Decide, then cancel in writing and keep the confirmation.

Our guide to cancelling or changing your life insurance has more on the process.

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 advice, and does not tell you to cancel or keep any policy. 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. The FMA notes that some insurers claw back adviser commission if you cancel in the first couple of years (FMA: Insurance advice), so ask any adviser who suggests cancelling how they are paid.

References

Read the full insurance guides

Compare your cover with a licensed NZ adviser · free, no obligation.

Start your free comparison

Compare panel options first. A licensed NZ adviser can then review existing cover or help with an application.

Free, no obligation. Licensed NZ advisers · Craig Smith Business Services Ltd, FAP FSP712931.

Explore related pages: Life Insurance, Income Protection, Health Insurance, Trauma Insurance, Compare Insurance NZ.