Life insurance calculator NZ

How much cover does your family actually need?

Step 1

Your situation

Before tax. This drives the income replacement portion of your cover.

Does your partner earn income?

I have this many dependent children:

Step 2

Your debts

Outstanding balance on your home loan.

Credit cards, personal loans, car finance, hire purchase, etc.

Step 3

Existing cover

Total across all existing life policies.

Would be paid to your estate if you pass away.

These two are the scenario controls. Move the years slider and the figure below moves with it: at 10 years and 70%, the income replacement component of your estimate is $595,000. There is no correct answer, it is a judgement about how long your household would need support.

Indicative life cover requirement

$977,500

This is a sum insured to discuss, not a price. Nothing on this page estimates what cover would cost, that is set by an insurer once it has underwritten your age, health and occupation.

Resources you already have

What makes up that number

What stands out

The mortgage is included in full

This estimate assumes the loan is cleared rather than kept and serviced. Cover that decreases alongside the loan balance is a different structure with a different result, and is worth raising with an adviser.

How we calculated this

This calculator uses the DIME method , Debt, Income replacement, Mortgage, Education, plus funeral costs and the cost of raising dependent children, then subtracts what you already have. On your figures:

Income replacement. Your household earns $85,000 a year between you. At 70% that is $59,500 a year of income to replace . Over 10 years that comes to $595,000.

Mortgage and debts. Added in full, at $370,000, so the household is not left servicing them.

Funeral and immediate costs. Included at $12,500.

Existing resources. You have not entered any existing life cover, KiwiSaver or savings, so nothing is subtracted from the total.

Assumptions applied to your result

• Income replacement: 70% of combined household income for 10 years, less any partner income, which is assumed to continue unchanged.
• Mortgage and other debts are included at their full outstanding balance, on the assumption the household clears them rather than keeps servicing them.
• Education: $30,000 per dependent child.
• Child-rearing: $500 per child per month until that child turns 18, counted from the age band selected.
• Funeral and immediate costs: $12,500.
• Existing life cover, KiwiSaver and accessible savings are subtracted in full, which is what turns a total need into a gap.

Limitations, what this estimate does not do

• No price is calculated. This tool sizes a sum insured, never a premium, premium is set by an insurer once it has underwritten your age, health, occupation and cover choices, and no figure here is a quote.
• No inflation is applied, so a figure meant to last twenty years is stated in today’s dollars.
• No investment return is assumed on the lump sum, and no tax on that return is modelled.
• Estate and trust structures, relationship property, and how quickly cover would actually be paid out are not modelled.
• ACC does not pay on death from illness, and any ACC survivor entitlement following a fatal accident is not modelled.
• Nothing about your health, occupation or smoker status is asked for or used, and those are what decide whether cover is offered and on what terms.

Review this with a licensed adviser

A licensed New Zealand adviser can test this estimate against your health, occupation, budget and any policy you already hold. No obligation, and none of the figures you entered above are sent with this form.

This calculator gives general information only and is not personalised financial advice. It sizes an indicative cover requirement using the DIME method, never a premium, and no figure on this page is a quote. Financial advice is provided by Craig Smith Business Services Limited, trading as Smiths Insurance & KiwiSaver, a licensed Financial Advice Provider (FSP712931).

What does this life insurance calculator do?

This calculator estimates how much life cover a New Zealand household would need if the person insured died, by adding up what would still have to be paid and subtracting what is already there to pay it. It uses the DIME method, Debt, Income replacement, Mortgage, Education, plus funeral costs and the cost of raising any dependent children, then deducts existing life cover, KiwiSaver and savings.

It is built for people working out a starting number: new parents, new homeowners, and anyone who holds a policy they have never checked against their current mortgage or income. It runs entirely in your browser and nothing is sent anywhere unless you fill in the contact form.

How do you read the result?

The headline number is a gap, not a price. It is the shortfall between what your household would need and the assets it already has, so it is the sum insured to discuss with an adviser, never a premium. A result of zero means the existing cover, KiwiSaver and savings you entered already meet the estimated need, which is a legitimate answer and often the right one.

The breakdown underneath shows which component is driving the number. If mortgage dominates, decreasing cover that tracks the loan balance is worth asking about. If income replacement dominates, the years and the replacement percentage you chose are doing most of the work, and moving either changes the answer sharply.

What assumptions does it make?

The calculator makes six assumptions, all of them adjustable on this page and all of them defaults rather than research findings. Income replacement defaults to 70% of your annual income for 10 years. Mortgage and other debts are added in full. Funeral costs default to $12,500 and can be set anywhere between $5,000 and $25,000.

• Income replacement: 70% of the household's combined income, less any partner income, multiplied by 10 years by default. A partner's income is assumed to continue unchanged, so it reduces the lump sum the household would need. With no partner income entered this is simply 70% of your income for 10 years.
• Mortgage and other debts: included at their full outstanding balance, on the assumption the family clears them rather than continues to service them.
• Education: $30,000 per dependent child by default, which is the figure this tool uses for a three-year degree.
• Child-rearing costs: $500 a child each month until that child turns 18, counted from the age band you select.
• Funeral costs: $12,500 by default, adjustable from $5,000 to $25,000.
• Existing assets: your current life cover, KiwiSaver balance and other savings are subtracted from the total, which is what turns a need into a gap.

The income and mortgage boxes open pre-filled so the tool shows a working example rather than an empty form. Replace both with your own figures before reading anything into the result.

Methodology: the calculation in full

The whole calculation is five additions and one subtraction, and it runs in your browser. Nothing you type is transmitted anywhere. Written out, the arithmetic is:

income replacement + mortgage + other debts + education + child costs + funeral = total need total need − existing life cover − KiwiSaver − savings = your gap

1. Income replacement. Your income and any partner income are added together, and 70% of that combined figure is taken as what the household would need each year. Partner income is subtracted from it, because that income keeps arriving. Whatever is left is multiplied by the number of years chosen. If a partner already earns more than the household need, this component is nil.
2. Mortgage and other debts. Added at their full outstanding balance.
3. Education. The per-child figure multiplied by the number of dependent children.
4. Child-rearing costs. For each child, $500 a month for every month between the middle of the age band selected and that child's eighteenth birthday.
5. Funeral and immediate costs. Added at the figure on the slider.
6. Existing resources. Existing life cover, KiwiSaver and accessible savings are subtracted from the total. If they exceed it, the tool reports a surplus rather than a negative gap.

No premium, price or cost is produced at any stage. This tool sizes a sum insured. What that cover would cost is decided by an insurer after it has underwritten your age, health, occupation and cover choices, and no figure on this page is a quote.

What the calculator ignores

The estimate is deliberately simple and leaves out several things that move a real recommendation: inflation over the years cover is held, investment returns on a lump sum, tax, trust structures, ACC entitlements, your partner's future earnings, and anything about your health or occupation. It also makes no allowance for the difference between level and stepped premium structures.

Because of that, it cannot tell you what cover would cost. No figure on this site is a quote. Price is set by the insurer after it underwrites your age, health, occupation and cover choices, and two people with the same estimated need are routinely offered very different terms.

What to do with the number

Treat the result as the opening line of a conversation with a licensed New Zealand financial adviser, who will test it against your health, occupation, budget and existing policy wording before recommending a sum insured. Reviewing cover once a year, or whenever a baby, a house or a change of job arrives, keeps the number honest.

Compare your cover with a licensed NZ adviser , free, no obligation. You can also call 09 801 2119, Monday to Friday 9am to 6pm NZT.

Where this comes from

Sources: the method and every default above are the constants and formula used by this calculator itself (the DIME framework, as implemented in this tool). They are starting assumptions, not published New Zealand averages, and are stated here so you can see exactly what the number is built from and change any of them.

QuoteHub operates under Smiths Insurance & KiwiSaver (FSP 712931), the trading name of Craig Smith Business Services Limited, a Class 2 Financial Advice Provider based in Sydenham, Christchurch. Advice is given across the insurers named on our disclosure page, which is a panel rather than the whole New Zealand market, and advisers are paid commission by the insurer rather than a fee by you, see how we're paid. This page is general information, not personalised financial advice.

How much life insurance do you need in NZ?

Life cover in New Zealand is sized by replacing four categories of financial need and then subtracting what is already in place. It is not a judgement about what a person is worth. The question is narrower: what would your household still have to pay for if you died, and what does it already hold that would pay for it?

debts + income replacement + immediate costs + future family costs − existing resources = your target cover

The calculator above runs exactly that arithmetic. The five steps below explain what belongs in each line, so you can sanity-check the number it produces rather than take it on trust. Nothing here is a price. What cover costs is a separate question, answered with sourced published figures on how much life insurance costs in NZ.

Step 1: the debts that would still have to be cleared

Start with every liability the household would still carry, not just the mortgage principal. Personal loans, credit cards, car finance and buy now pay later balances all survive you. So do business debts you have personally guaranteed, which is the line self-employed applicants most often forget. Student loan balances are the exception: they are generally written off on death.

The stress test worth running is whether your partner could service the mortgage alone on their own income. If the answer is no, the full outstanding balance belongs in the calculation rather than a share of it.

Step 2: the income that would have to be replaced

Income replacement is usually the largest single component, and there are two ways to size it. Both are legitimate, and most advisers use one to set a benchmark and the other to test it.

The income multiple method

Multiply your annual after-tax income by the number of years your dependants would need support, usually the years until the youngest child is financially independent. Many advisers then apply a discount of roughly 70 to 75 percent, on the reasoning that a lump sum paid up front can be invested conservatively and will partly fund itself. The method is quick and it is the one the calculator above uses by default.

The needs-based method

Instead of replacing your income, price what the household actually spends: housing, food, power, transport, school costs, childcare, medical and everything else. Then subtract the surviving partner's income and any government support they would receive, and multiply the annual shortfall by the years it would run for.

The needs-based number is usually lower, because it credits the partner's earnings. It is also more fragile, because it assumes those earnings continue. A partner who becomes the sole caregiver often cannot work the hours the model assumes, and rebuilding to full capacity commonly takes one to three years.

Step 3: the costs that land immediately

A death creates one-off costs long before an estate settles. Funeral and service costs come first. Legal and estate administration follows, and probate on even a straightforward New Zealand estate commonly takes three to six months. During that window the household needs cash it cannot yet draw from the estate, which is why a buffer of several months of expenses belongs here rather than in savings.

Two smaller lines are worth adding if they apply to you: grief and counselling support, and travel for family who live overseas or at the other end of the country.

Step 4: the family costs still to come

Where there are dependent children, the costs run for years after the immediate ones are settled. Childcare is the heaviest in the preschool years, before and after school care replaces it, and school costs run to eighteen. Tertiary study is a separate decision: some families fund a degree in full through their cover, others exclude it on the basis that study can be partly self-funded. Include schooling to eighteen at minimum, and treat education beyond that as a values call rather than a rule.

You will not need to insure every line in full. A surviving partner's income, Working for Families and childcare subsidies all offset part of it. The point of listing the costs is to avoid a blind spot, not to insure the gross figure.

Step 5: what you already have

Existing resources are what turn a need into a gap, and they are the step people skip. Count savings and investments, your KiwiSaver balance, any personal life policy already in force, employer or group cover, and other assets net of the debt against them.

• Employer group cover is usually one to two times salary. It is real cover, but it typically ends when you leave the employer and is rarely portable, so it is a supplement rather than a plan.
• ACC supports accidental death only. It pays nothing at all for death from illness, which is what most working-age claims are. Our guide to what ACC does not cover sets out where the line falls.
• KiwiSaver is paid to your estate or nominated beneficiary, so it is a genuine asset here. It is also your partner's retirement money, so leaning on it heavily solves one problem by creating another.

What the answer usually looks like

Run the same arithmetic across ordinary New Zealand households and a pattern appears. A single renter with no dependants is sizing debt clearance and final expenses, and lands in the low hundreds of thousands at most. A couple with a mortgage and no children is mostly sizing the mortgage, so each partner insures roughly their share of it plus a buffer. A family with children under five carries the longest income replacement horizon and the highest childcare costs, and routinely lands above a million dollars per earner. An established family with teenagers needs less, because the replacement horizon is shorter. A retired couple with no mortgage is back to final expenses and estate tidying.

Self-employed households have one extra line. If you die, someone has to close or transition the business, and that costs money before it releases any. Personally guaranteed business debt and a wind-down allowance both belong in the debt step.

The income multiple shortcut, and where it breaks

The common rule of thumb multiplies gross annual income by a factor set by life stage: roughly three to five times with no dependants and little debt, five to eight for a couple with a mortgage, ten to fifteen for a family with young children, and eight to twelve once the children are at school. It is a reasonable opening bid and a poor final answer.

The shortcut breaks in two predictable directions. It understates the need for households with a large mortgage relative to income, because the debt is not in the multiple at all. It overstates the need for households with substantial existing assets, because nothing is subtracted. Use it to check that the full calculation is in the right order of magnitude, then use the full calculation.

Six mistakes that produce the wrong number

1. Covering only the mortgage. A debt-free home does not feed anyone. Income replacement belongs in every calculation with dependants in it.
2. Treating group cover as the plan. One to two times salary rarely clears a mortgage and raises children, and it ends with the job.
3. Assuming ACC fills the gap. ACC is an accident scheme. Illness is the majority of working-age death, and ACC pays nothing for it.
4. Never revisiting the number. Cover set at a first child's birth is wrong by the time that child is sixteen. Review it yearly and after any mortgage, baby, job or health change.
5. Ignoring the caregiver transition. A surviving partner who has to return to full-time work needs the buffer to cover the years it takes, not the weeks.
6. Over-insuring and never reducing. As the mortgage falls and savings grow, the need falls with them. Reducing cover is a legitimate outcome of a review.

What a calculator cannot do

This tool sizes a sum insured. It cannot tell you what that cover would cost, because price is set by an insurer after it underwrites your age, health, occupation and cover choices, and two people with the same estimated need are routinely offered very different terms. It also cannot weigh how different insurers would treat your particular health history, how life cover should interact with income protection and trauma cover, how a policy owned by a trust behaves, or which policy features matter at claim time.

Two decisions sit just past the number and change what you pay over a lifetime: the premium structure, covered in our guide to stepped versus level premiums, and the underwriter you apply to, which matters most if you have a pre-existing condition. Use the estimate above as the opening line of that conversation. Our other insurance calculators size the income protection and trauma side of the same question.

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

Explore related pages: Life Insurance, Income Protection, Health Insurance, Trauma Insurance, Free Will.