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Finding the right life insurance policy can be tough. Deciding when to buy, how much you’ll need and what type to take can be confusing. As a result, New Zealanders often make mistakes that could hurt their finances.

Whether it’s a first policy or one you’ve had for years, be sure you’re not making these six life insurance mistakes.

1. Procrastination

When you’re young, life insurance is probably the last thing on your mind. You may feel invincible or see little need to purchase a policy before you’ve reached certain adult milestones (marriage, buying a home, having a baby). But there are some good reasons to consider a life insurance policy whilst you’re still young. 

It’s a fact of life that our health deteriorates as we age. Procrastinating for too long could mean getting a policy with exclusions due to pre-existing conditions. Healthy 20-somethings generally pay lower premiums, and may save more money compared to those who take out policies later in life.

2. Buying too little

Research has found that New Zealanders tend to underestimate the amount of life insurance they may need.1 People often simply guess how much cover will be enough or just pick the least expensive option.

Whilst some life insurance may be better than none, having the best policy in place from the start could provide you with the most peace of mind. Consider how a life insurance payout might help your loved ones, whether that’s by helping to pay off a mortgage, allowing your partner to take time off work or setting aside money for your children’s education. Matching the price tag of these goals to the amount of cover purchased may be a good place to start.

3. Not purchasing at all

Those who put off buying a life insurance policy or take out too little coverage still have a head start on those who never get covered. Life insurance may feel unnecessary or even like you’re tempting fate. But if the worst were to happen, not having a policy could leave your family vulnerable to financial hardship.

We all hope the worst never happens, but having a plan can help provide you peace of mind. A life insurance policy can help your loved ones pay off debts, plan a funeral or take care of household expenses.

4. Neglecting to cover your partner

Many people believe that only the primary breadwinner needs to be insured. This may work for some families, but for many Kiwis it could make sense to cover both partners.

Your family’s finances could be affected if your stay-at-home partner dies or becomes seriously ill. The jobs they do around the house—childcare, cooking, cleaning—would cost a lot if you suddenly needed to pay someone else to do them. You might also want to take time off to care for your partner, and a policy that pays out on the diagnosis of a serious illness could help you afford to do so.

5. Forgetting to consider extras

Life insurance can feel overwhelming. There are so many policies to compare, with optional extras that can require more research and consideration. It can be tempting to just purchase a policy and ignore any suggested add-ons. However, extras can provide added value and protection for your family.

Optional extras on life insurance policies may include an early payout of the benefit if the insured suffers a serious illness or injury, or a larger payout if their death is the direct result of an accident. These extras could provide the money needed to cover large medical bills, ongoing care or rehabilitation costs, or help replace lost salary whilst you’re unable to work.

6. Never reviewing your policy

The phrase “set it and forget it” rarely applies to life insurance. As your life changes, so do your insurance needs. Reviewing your policy at key life stages can help ensure you have the right amount of cover at all times.

Some events—getting married, taking on a mortgage or having kids—may mean upping your cover. Other times you may consider decreasing it, such as at retirement or after paying off a home loan. You should also check your policy before starting any risky hobbies, such as skydiving, to make sure you’ll be covered in case of an accident. 


Disclaimer: The information provided in this article is of general nature, and does not take into account your personal situation. You should consider whether the information is appropriate to your needs or seek professional advice, where necessary.

All product information is correct at the time this article was published. For current product information, please visit the Momentum Life website.


1. Massey University, Exploring Underinsurance within New Zealand. 2011



About Author: Momentum Life is a leading provider of Life insurance, Funeral insurance and Accident insurance in New Zealand.

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