Part of our “Quick Insurance Q&A (NZ)” series answering common insurance questions for Kiwis.
How much life insurance is enough in New Zealand?
There’s no one-size-fits-all number but most people base it on what needs to be covered if they died.
A simple way to think about it:
What financial gap would be left behind?
Independent organisations like Consumer NZ also highlight that life insurance is most useful when others rely on your income.
A practical way to calculate it
Most Kiwis build their cover using:
1. Debt
- Mortgage
- Personal loans
2. Income replacement
- 2–5 years of income is common
- More if you have young children
3. Children’s costs
- Education
- Living expenses
4. Final expenses
- Funeral costs (often $10k–$20k in NZ)
Example
A typical scenario might look like:
- $800,000 mortgage
- $150,000 (3 years income buffer)
- $20,000 final costs
Total: ~$970,000 cover
Should you insure more than your mortgage?
Often, yes.
Only covering the mortgage means:
- Your home is paid off
- But your family still needs income to live
That’s why many people include an income buffer.
What affects how much you need?
- Number of dependents
- Age of your children
- Your partner’s income
- Existing savings or assets
Can you have too much life insurance?
You can but most people are actually underinsured.
The main downside of too much cover is:
- Higher premiums
A good approach is:
Enough to remove financial stress, but still affordable long-term.
Should you review your cover?
Yes – especially after:
- Buying a house
- Having children
- Income changes
Bottom line
A good level of cover is:
Enough to clear debt and give your family time to adjust financially.
If you’re not sure what this looks like for your situation, it’s usually worth having a quick chat. At Canvas Insurance, we help Kiwis make sense of their options and set things up in a way that actually fits. Get in touch with Kris directly if you want to talk it through with a broker.
