A significant rise in premiums for some policy holders is almost certain next year, the organisation representing life insurance companies believes.
The Investment Savings and Insurance Association says a law change passed last week will require companies to pay more tax on life insurance policies.
Chief executive Vance Arkinstall says the change will not affect existing policies for five years.
However, Mr Arkinstall says new customers may face premiums of up to 25% higher from July 2010, when the new tax law takes effect.
He says companies will be forced to pass the cost on because their margins are too narrow to absorb the increase.
Mr Arkinstall says it is unfortunate the change is taking place as New Zealand emerges from a recession, but he doubts people will stop their policies.