How much life insurance does a NZ family need?
‘Enough to pay off the mortgage’ is a good start, but it’s often not enough. Here’s the method I use with families in Papakura and South Auckland.
Add up your mortgage and other debts, plus the income your family would need for a set number of years, plus costs like childcare and education. Then take away savings, KiwiSaver and any cover you already have. For many young families with a mortgage, that comes to somewhere between the mortgage amount and twice that.
By Kyle Hasson, Insurance and KiwiSaver Adviser (FSP1010252) · Last reviewed October 2026
Step 1: Debts you’d want cleared
Start with your mortgage, then add car loans, credit cards and personal loans. Clearing debt is usually the biggest single need, because it lets your family stay in their home without your income.
Step 2: Income your family would need
Even with no mortgage, your family still has living costs. A common approach is to replace part of your take-home pay, often 50% to 75%, for a set number of years, such as until your youngest child finishes school.
Step 3: Other costs
- Childcare: if a partner needs to keep working, childcare costs can rise.
- Education: money set aside for school and tertiary study.
- Funeral and final costs: often $10,000 to $20,000.
- An emergency fund: a buffer for the unexpected.
Step 4: Take away what you already have
Subtract savings, investments, your KiwiSaver balance (which goes to your estate) and any life cover you already have, including cover through work. Check whether work cover would continue if you changed jobs.
A worked example
Here’s an example for a couple in Takanini with two young children and a $600,000 mortgage, for the main earner on $90,000:
| Need | Amount |
|---|---|
| Mortgage and other debts | $620,000 |
| Income support: $35,000 a year for 10 years | $350,000 |
| Children, funeral and emergency fund | $60,000 |
| Less savings and KiwiSaver | −$50,000 |
| Life cover needed | about $980,000 |
Your number will be different. Try our insurance needs calculator to work out yours in a couple of minutes.
Don’t forget the other partner
If one partner stays at home or works part-time, their cover matters too. Replacing childcare and household work can cost tens of thousands of dollars a year.
Keep it affordable
If the full amount doesn’t fit your budget, start with what you can afford and use your policy’s life event options to increase it later, for example when you have another child or your mortgage changes. Many policies let you do that without new health questions, until about age 55 to 60. Read more on our life insurance page.
This article is general information only, not personalised financial advice. Talk to us about your situation.
Common questions
Can’t see your question? Get in touch. There’s no such thing as a silly question.
Is 10 times my income enough life insurance?
It’s a rough rule of thumb, but it can be too much or too little. Working it out from your debts, your family’s income needs and what you already have gives a much better answer.
Should life insurance cover the whole mortgage?
For most families with dependants, yes, as a starting point. Clearing the mortgage lets your family stay in the home without your income.
How often should I review my life cover?
Whenever your life changes: a new baby, a bigger mortgage, a new job or a separation. Otherwise, a review every two to three years is a good habit.
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