Putting life insurance in a family trust in New Zealand

Written by Henry Smith · Reviewed by Smiths Insurance & KiwiSaver, licensed Financial Advice Provider (FSP712931) · Updated 2026-10-20 · Reviewed quarterly, when the underlying data is restated.

Financial advice is provided by Craig Smith Business Services Limited, trading as Smiths Insurance & KiwiSaver, a licensed Financial Advice Provider (FSP712931). QuoteHub is a trading name.

Yes, a New Zealand family trust can own a life insurance policy, if the insurer accepts trustees as the policy owner. When the person insured dies, the trustees claim and the payout goes to the trust, not to the person's estate. Not every insurer or product allows this, and a trust does not reliably shield money from relationship property claims or creditors.

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A trust-owned life policy is a policy where the owner on the insurer's records is the trustees of a trust, not the person insured. The insurer pays the owner, so the trustees receive the payout and the trust deed decides what happens next. Fidelity Life's published claims guide says that where someone other than the deceased owns the policy, the owner is eligible to claim (Fidelity Life claims guide, read by QuoteHub on 20 October 2026). That is the whole mechanism: the policy is a trust asset, not a personal one, so it is not paid to the executor. It is general information, not legal or tax advice. A solicitor and a licensed financial adviser should both be involved before you set one up.

What changes when the trustees own the policy

The table sets out who claims and whether the payout goes through the estate, in the structures an insurer's own documents describe.

Who owns the policy	Who claims at death	Does it go through the estate?
The person insured, no beneficiary named	The executor, or the administrator if there is no will	Yes. Asteron Life's claims page asks for the will or letters of administration, and probate where the sum insured is over $40,000
The person insured, with a nominated beneficiary (where the insurer allows it)	The named beneficiary	Generally not (Fidelity Life's table)
Trustees of a family trust	The trustees, as owners	No. The owner claims, whatever the insured's will says
An additional or joint owner who survives	The surviving owner	Generally not

Sources: Asteron Life: Claims, the Fidelity Life guide above and QuoteHub's guide on who gets a life insurance payout. Always confirm against your own policy.

Section 65 of the Administration Act 1969 is a different thing. It lets certain payers, including a life insurer for sums payable to the administrator, pay up to $40,000 without a grant (Administration Act 1969, s 65). It matters only if the payout is going to the estate. It is not a probate bypass for trusts, and it does not set a threshold for trustees. For what happens next, see what happens to a payout after a death.

What a trust does not do

It is not a guaranteed shield from relationship property claims. The Property (Relationships) Act 1976 treats the part of a policy's value or proceeds that is attributable to the relationship as relationship property (s 8(1)(g)), and the court can make orders about policies (s 30) (Property (Relationships) Act 1976). Sorted says the protections trusts once offered "have diminished in recent years" and that both partners should take independent legal advice before assets move (Sorted: Family trusts). See the relationship property guide.
It is not a guaranteed shield from creditors. Sorted says a trust can "protect selected assets against claims and creditors", and also warns that a poorly managed trust could be treated as a sham.
It is not free. Sorted says a trust costs money to set up and generally has ongoing legal or accounting fees. See the family trust guide for named price points.
It does not remove the need for a will. A trust owns the policy, not the rest of what you leave.

Traps to check

Does the insurer take trustees as owner? Ask before you apply, in writing. The wording and the application form decide, not general practice.
Who pays the premiums? The trust needs a source of money for them. Have the funding method written down by your solicitor or accountant, since we found no published rule on it.
Trustee changes. Trustees change over time. Ask the insurer what it needs to update the owner on its records, and keep the trust deed with the policy papers.
Duties. Trustees have duties under the Trusts Act 2019, including to know the terms of the trust (s 23), act in accordance with them (s 24), and act honestly and in good faith (s 25) (Trusts Act 2019).
Tax. Inland Revenue's page on insurance payouts covers income protection and personal sickness policies and does not mention life insurance (Inland Revenue: Insurance payouts), so ask an accountant how a life payout is treated in a trust. Inland Revenue's trustee rates from 1 April 2024 are 33% on undistributed trust income up to $10,000 a year and 39% above that (Inland Revenue: Trustee tax rates), which could apply to interest a trust earns on a payout it keeps.

Trust ownership or personal ownership

	Trust-owned	Personal ownership with a nominated beneficiary	Personal ownership, payout to estate
Who claims	Trustees	The beneficiary	The executor or administrator
Control after death	The trust deed and trustees	The beneficiary	The will, or intestacy rules
Grant may be needed	Not for this reason	Generally not	Yes, above the insurer's limit
Set-up cost	Trust set-up and running costs	None beyond the form	None
Needs insurer agreement	Yes	Insurer-specific	No

A trust makes most sense where you want money held for children or a vulnerable family member, or kept apart from the estate for a defined purpose. A nominated beneficiary can suit a simple case. For a couple, see joint life insurance, and for what the estate route costs, probate lawyer fees.

Where Momentum Life stands

Momentum Life's wordings say little that supports a trust. For Quick Life, the policy owner is the person insured, or, where owned by someone else, "a member(s) of the insured's immediate family, limited to parents or siblings". A trust is not listed. Funeral Insurance requires the policy owner and the beneficiary to be a "natural person", and says Momentum cannot pay a benefit directly to a company, charity or other organisation. Neither wording mentions trusts, so ask Momentum before assuming trustees can own or be named, because we have seen no statement that they can (Quick Life policy wording, Funeral Insurance policy wording). Quick Life lets the owner name a beneficiary, and without one the benefit goes to the owner or estate.

The buttons on this page open Momentum Life's online quote, which suits a personally owned policy. Quick Life takes ages 18 to 65 with no health questions, but excludes pre-existing conditions and suicide for the first 2 years; see guaranteed acceptance. Funeral Insurance takes ages 40 to 75 and pays only for accidental death in the first 24 months; total premiums can end up larger than the benefit. Momentum Life Limited's A.M. Best rating is B (Fair), in the "Vulnerable" range; see its financial strength page.

QuoteHub is a Momentum Life partner, and Smiths Insurance & KiwiSaver may receive a commission if you buy; see how we are paid. General information, not advice. Financial advice is provided by Craig Smith Business Services Limited, trading as Smiths Insurance & KiwiSaver, a licensed Financial Advice Provider (FSP712931). A licensed adviser can compare insurers that accept trust ownership. Last reviewed 20 October 2026. Back to the estate guides.

Get a quote and apply online today

See your price in about a minute, then apply online with Momentum Life. Guaranteed acceptance, no health questions, no medical exams.

Life cover See your price Ages 18–65 · $50k–$300k Funeral cover See your price Ages 40–75 · $3k–$30k

Want more than $300k or have questions? Talk to an adviser

Funeral cover: Only accidental death is covered for the first 2 years. Total premiums can add up to more than the cover, and it may not meet the whole cost of a funeral.

Already have cover? Keep it. New cover won't pay for a condition you already have in its first 2 years.

Adviser's view

Trust ownership can keep a payout out of the estate and put control in the hands of named trustees, which suits some families. It does not reliably shield money from relationship property claims or creditors, it adds cost and duties, and not every policy can be owned that way. Momentum Life's Quick Life and Funeral Insurance wordings do not mention trust ownership, so ask before you plan around it.

Henry Smith, Financial Adviser (FSP1010699). General information, not personalised financial advice.

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Cite this page QuoteHub NZ (2026). Life Insurance in a Trust NZ: How It Works. www.quotehub.co.nz/guides/estate/life-insurance-in-a-trust-nz. Updated 2026-10-20.