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. Want to deep dive more into understanding about Life Insurance? Read our full guide here.
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.
