Two numbers moved in opposite directions this year, and the gap between them is the thing worth understanding.
Financial Services Council data Financial Services Council data puts annual life insurance premiums at $3.31 billion as at 31 March 2026, up 2.7% year on year. Over the same period the number of covers held fell across several key products, against a population of roughly 5.35 million and around four million covers in force.
More money, fewer people protected. Both are true at once.
How it happens
Almost nobody decides to be underinsured. What happens instead is a sequence of individually sensible decisions.
The premium rises at renewal. You reduce the sum insured a little to hold the cost flat. The following year the same thing happens, and you do it again. Neither adjustment felt like much. Five years on, the cover bears no particular relationship to the mortgage, which has grown, or the income, which has grown, or the children, who have arrived.
The cover was set against the life you had. The life moved. The cover stayed where it was.
A test you can do this evening
A sheet of paper will do. The arithmetic is not the hard part.
- What must be cleared? Mortgage, business debt, anything personally guaranteed.
- What must continue? The household's annual running cost, multiplied by the number of years it would need to run without your income. For a family with young children this is usually a larger number than people expect.
- What is still coming? Education, a dependent relative, a shareholder buy-out already agreed in principle.
- What already exists? Current cover, KiwiSaver, and assets you would genuinely be willing to sell.
Add the first three, subtract the fourth. If the difference is uncomfortable, that discomfort is the useful part.
Why trimming the sum insured is the wrong lever
When cost pressure arrives, the sum insured is the easiest thing to reduce and the most expensive thing to lose.
There are usually better adjustments available: how trauma and life cover are layered, whether cover is standalone or accelerated, the benefit period on income protection, the wait period before it starts. Those are technical levers, and they move the price while keeping the protection. It is most of what taking advice actually buys you.
One more thing about sums insured
Insurance is one of very few purchases where the buyer never inspects the goods. You will not find out whether the number was right until it is paid, and by then the person who chose it is often not in the room.
Which is an argument for being deliberate about it while the choosing is still yours.
Arrange a time to talk. We meet in person, in Hamilton or wherever suits you.
Premium and cover figures: Financial Services Council industry data as at 31 March 2026, reported May 2026.