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Life Insurance Claims, Exclusions and Disclosure in New Zealand

In New Zealand, most life insurance claims are paid where the policy is active, the claim meets the policy wording and the information provided during the application was accurate and complete. However, claims may be delayed, reduced or declined in certain circumstances.

This guide explains how life insurance claims generally work, why exclusions matter, and why accurate disclosure is important when applying for cover.

A life insurance claim is a request for the insurer to pay the policy benefit after an insured event occurs.

For standard life insurance, the insured event is usually:

• Death of the insured person
• Terminal illness diagnosis, if the policy includes a terminal illness benefit and the policy definition is met

The claim must meet the terms set out in the policy wording. The insurer will assess the claim against the policy schedule, application information, medical evidence and any exclusions or special conditions.

Who can make a life insurance claim?

The person who can make a claim depends on how the policy is owned and structured.

A claim may be made by:

• A nominated beneficiary
• The policy owner
• The executor or administrator of the estate
• A trustee
• A business entity
• A legal representative

If the insured person and policy owner are different people, the claim process may involve both the policy owner and beneficiaries. If the benefit is payable to the estate, the insurer may require estate documentation before payment can be made.

Policy ownership and beneficiary arrangements should be reviewed carefully because they can affect who receives the payment and how quickly it may be processed.

Common documents required for a life insurance claim

The exact documents required vary between insurers and circumstances. However, a life insurance claim commonly requires:

• Completed claim form
• Certified copy of the death certificate
• Proof of identity for the claimant
• Policy details
• Medical reports, where relevant
• Coroner's report, where applicable
• Police report, where applicable
• Probate or letters of administration, where required
• Beneficiary or estate documentation
• Bank account details for payment

For a terminal illness claim, the insurer may request medical evidence from treating doctors or specialists confirming the diagnosis and prognosis in line with the policy definition.

How the life insurance claims process generally works

Although each insurer has its own process, life insurance claims commonly follow several stages.

1. Notification

The insurer is notified that the insured person has died or may meet the terminal illness definition. This may be done by a beneficiary, policy owner, adviser, lawyer, trustee or estate representative.

2. Claim forms and document request

The insurer provides claim forms and explains what documents are needed. Some insurers allow documents to be submitted online, while others may require certified copies.

3. Initial review

The insurer confirms the policy details, including:

• Whether the policy was active
• The sum insured
• The policy owner
• Beneficiary details
• Premium payment status
• Any special conditions or exclusions

4. Assessment

The insurer assesses whether the claim meets the policy terms. This may involve reviewing medical records, application answers, cause of death, policy exclusions and any relevant legal documents.

5. Further information if needed

The insurer may request additional information from doctors, hospitals, the coroner, police, the estate or the claimant. This can extend the time needed to assess the claim.

6. Claim decision

The insurer decides whether the claim is accepted, partially accepted, deferred while more information is obtained, or declined.

7. Payment

If the claim is accepted, payment is made to the person or entity entitled to receive the benefit under the policy terms.

Why some claims take longer than others

Some claims are straightforward and may be assessed relatively quickly once all documents are received. Others may take longer because further verification is needed.

Delays may occur where:

• The death certificate is not yet available
• The cause of death is unclear
• A coroner's investigation is underway
• Policy ownership or beneficiary details are unclear
• Probate or estate documents are required
• The policy was recently taken out
• Medical records need to be reviewed
• There are concerns about non-disclosure
• The policy had special terms or exclusions
• Premium payment status needs to be confirmed

A delay does not automatically mean a claim will be declined. It may simply mean the insurer needs more information before making a decision.

What are life insurance exclusions?

Exclusions are policy terms that set out circumstances where a benefit may not be payable. Exclusions are part of the insurance contract and should be read before applying for cover.

Common life insurance exclusions or limitations may relate to:

• Suicide within a specified initial period
• Non-disclosure or misrepresentation
• Excluded medical conditions
• Excluded hazardous activities
• War or civil unrest
• Criminal activity
• Policy lapse due to unpaid premiums

The exact exclusions depend on the insurer, policy wording and underwriting outcome.

Suicide exclusion periods

Many life insurance policies include a suicide exclusion for an initial period after the policy starts, is reinstated or is increased. The period is often specified in the policy wording.

If death occurs by suicide during that exclusion period, the insurer may decline the claim or limit payment depending on the policy terms.

Because wording varies, it is important to check:

• How long the exclusion period applies
• Whether it applies to reinstated cover
• Whether it applies to increases in cover
• Whether any refund of premiums is available

This is a sensitive area, and claim outcomes depend on the policy wording and circumstances.

Non-disclosure and misrepresentation

Non-disclosure occurs when relevant information is not provided to the insurer during the application or underwriting process. Misrepresentation occurs when information is provided but is inaccurate or misleading.

Examples may include not accurately disclosing:

• Medical conditions
• Past surgery or hospital admissions
• Medications
• Smoking or vaping status
• Alcohol or drug use
• Occupation risks
• Hazardous hobbies
• Previous insurance applications or declines
• Family medical history, where asked
• Travel plans, where asked

If an insurer later finds that important information was not disclosed, it may review whether the policy would have been offered on the same terms. Depending on the circumstances and applicable law, this could lead to a claim being delayed, reduced or declined, or the policy being adjusted or avoided.

Why accurate disclosure matters

Life insurance relies on information provided at application. Insurers use that information to decide:

• Whether to offer cover
• What premium to charge
• Whether to apply special conditions
• Whether further medical evidence is needed
• Whether any exclusions or loadings should apply

Accurate disclosure helps ensure the policy is assessed properly from the beginning. It also reduces the risk of disputes at claim time.

Applicants should answer questions carefully and seek clarification if they do not understand what is being asked. If unsure whether something is relevant, it is generally safer to disclose it.

What is underwriting?

Underwriting is the process the insurer uses to assess an application for cover. It may involve reviewing:

• Application answers
• Medical history
• Doctor reports
• Blood tests or medical exams
• Occupation
• Lifestyle and hobbies
• Family medical history
• Existing insurance
• Financial information for large cover amounts

The underwriting outcome may be:

• Cover accepted on standard terms
• Cover accepted with a premium loading
• Cover accepted with an exclusion or special condition
• Application postponed
• Application declined

Underwriting is important because it helps determine the final policy terms that will apply at claim time.

Policy lapse and unpaid premiums

A life insurance policy usually remains active only while premiums are paid. If premiums are missed, the insurer may allow a grace period. If payment is not made within the required time, the policy may lapse.

If a policy lapses before the insured event occurs, a claim may not be payable.

Policyholders should understand:

• Premium due dates
• Grace periods
• Reinstatement rules
• What happens after missed payments
• Whether cover continues during a grace period
• Whether new underwriting is required to reinstate cover

Contacting the insurer or adviser early can be important if premiums become difficult to pay.

Changes after the policy starts

Once a life insurance policy is in place, some changes may need to be reported or formally requested. These may include:

• Increasing the cover amount
• Adding optional benefits
• Changing policy ownership
• Changing beneficiaries
• Changing payment details
• Reinstating a lapsed policy
• Changing smoking status
• Moving overseas
• Changing occupation, if relevant to the policy terms

Not every change affects life insurance in the same way. The policy wording and insurer requirements should be checked.

Claim payments and beneficiaries

If a claim is accepted, the benefit is paid according to the policy structure.

Payment may be made to:

• A nominated beneficiary
• The policy owner
• The insured person's estate
• A trust
• A company or business entity

Where payment is made to the estate, probate or letters of administration may be required. This can take time.

Beneficiary nominations and ownership arrangements should be kept up to date, especially after major life events such as marriage, separation, divorce, birth of children, business changes or estate planning updates.

Tax considerations

The tax treatment of life insurance proceeds in New Zealand can depend on the policy structure, ownership, purpose of cover and whether it is personal or business-related.

Personal life insurance benefits are often treated differently from business-owned policies or policies linked to revenue protection. Because tax outcomes can be complex, policyholders should seek professional tax advice where needed.

This is particularly important for:

• Business-owned policies
• Key person insurance
• Buy-sell agreements
• Policies owned by trusts
• Policies connected to debt or business income
• Cross-border situations

The role of financial advisers during claims

A financial adviser or broker may assist with the claims process if the policy was arranged through them. Their role may include:

• Helping identify the correct claim forms
• Explaining document requirements
• Liaising with the insurer
• Helping beneficiaries understand the process
• Assisting with follow-up questions
• Explaining policy terms in general
• Referring claimants to legal or financial professionals where needed

Adviser services vary, so policyholders may wish to ask what claims support is available when arranging cover.

Complaints and disputes

If a claimant disagrees with an insurer's decision or is concerned about the handling of a claim, they can ask for the decision to be reviewed through the insurer's internal complaints process.

In New Zealand, financial service providers must belong to an approved dispute resolution scheme. If the complaint is not resolved internally, the claimant may be able to take the matter to the relevant external dispute resolution scheme.

Useful steps may include:

• Requesting written reasons for the decision
• Asking which policy terms were relied on
• Gathering supporting documents
• Keeping records of communications
• Seeking legal or financial advice if needed
• Using the insurer's complaints process
• Escalating to the relevant dispute resolution scheme if appropriate

Time limits may apply, so claimants should act promptly.

Reducing claim problems before they occur

Policyholders can reduce the risk of claim issues by:

• Answering application questions accurately
• Keeping copies of application documents
• Reading the policy wording
• Understanding exclusions and special conditions
• Paying premiums on time
• Updating payment details when needed
• Reviewing ownership and beneficiary arrangements
• Telling beneficiaries that the policy exists
• Keeping policy documents accessible
• Reviewing cover after major life changes
• Seeking advice where circumstances are complex

These steps do not guarantee a claim outcome, but they can make the process clearer and reduce avoidable issues.

Common misunderstandings about life insurance claims

"If I have a policy, every claim must be paid"

A policy provides cover according to its terms. Claims must meet the policy wording, and exclusions or non-disclosure may affect the outcome.

"The insurer already knows my medical history"

Insurers rely on the information provided during application and any medical evidence they request. Applicants should not assume the insurer has access to all health information unless it has been disclosed or supplied.

"Beneficiaries automatically receive payment immediately"

Payment depends on the policy ownership, beneficiary arrangements, required documents and claim assessment. Estate processes can add time.

"A quote means cover is already active"

A quote is not the same as an active policy. Cover usually begins only when the insurer accepts the application, the policy starts and premium requirements are met.

"Small details do not matter"

Details can matter if they are relevant to underwriting or claim assessment. Accurate answers are important.

Questions to ask before applying for life insurance

Before applying for cover, useful questions include:

1. What events are covered by the policy?
2. What exclusions apply?
3. Is there a suicide exclusion period?
4. What information must be disclosed during application?
5. Will medical underwriting be required?
6. What happens if a condition is excluded?
7. What happens if premiums are missed?
8. Who owns the policy?
9. Who receives the benefit if a claim is accepted?
10. What documents are needed for a claim?
11. Does the adviser provide claims support?
12. What complaints process applies if there is a dispute?

These questions can help consumers understand both the benefits and limitations of cover.

Key points to remember

Life insurance claims in New Zealand are assessed according to the policy wording, ownership structure, exclusions, premium status and information provided during application.

Accurate disclosure is important because insurers use application information to assess risk and set policy terms. Non-disclosure or misrepresentation may lead to delays, disputes or declined claims.

Policyholders should read their policy documents, understand exclusions, keep beneficiary details current and ensure premiums are paid on time. Where claim issues or disputes arise, consumers can use the insurer's complaints process and, if needed, the relevant external dispute resolution scheme.

Published: Saturday, 11th Jul 2026
Author: Paige Estritori