Life insurance cover softens as premium pressure builds

The FSC’s latest Spotlight on Life Insurance shows a life insurance sector continuing to support New Zealanders, while also facing a clear challenge around access, affordability and cover levels.

FSC industry data shows 4 million life insurance covers across New Zealand, against an estimated population of 5.35 million - as at 31 March 2026. Annual life insurance premiums reached $3.31 billion, up 2.7% year-on-year, even as cover numbers continued to fall across several key products.

This suggests New Zealanders are still paying for important protection, but fewer covers across key product areas may point to pressure on household budgets, changing customer needs or people reassessing the level of cover they can afford.

FSC CEO Kirk Hope says life insurance plays a major part in New Zealand’s financial safety net.

“It helps protect families, households and businesses when people are faced with death, serious illness, disability or loss of income. For many New Zealanders, it's one of the few financial backstops they have when something goes seriously wrong.

“But, as a sector, we need to keep working on affordability, confidence and helping more Kiwis understand the protection they can have.”

The latest snapshot also shows the largest areas of annual premium income remain term and accidental death cover, at $1.64 billion, followed by trauma insurance at $672 million and income protection at $539 million.

“These products sit at the heart of the protection conversation. They are designed to help people manage some of life’s biggest financial shocks, from a serious diagnosis to an inability to work or the death of a loved one,” says Hope.

The challenge for the sector is ensuring life insurance remains accessible, understood and valued at a time when many households are under pressure. Rising premiums can lead people to reduce or cancel cover, but doing so can leave them more exposed later.

That makes regular policy reviews important. Customers should be encouraged to talk to their insurer or adviser before making changes, as there may be ways to adjust cover, benefits or excesses without losing important protection altogether.

Key figures from the March 2026 quarter

• 4m life insurance covers
• 5.35m estimated New Zealand population
• $3.31b in annual life insurance premiums
• +2.7% year-on-year growth in annual premiums
• $1.64b in annual premium income from term and accidental death cover
• $672m from trauma cover
• $539m from income protection.

Click here for the downloadable version of the March 2026 Life industry spotlight.