Greater consumer protection is needed against insurance agents who may be switching people between companies against their best interests, according to a report.
The Financial Services Council commissioned consulting firm Melville Jessup Weaver to conduct the report into retail life insurance advice.
It followed a Ministry of Business, Innovation and Employment review of the Financial Advisors Act.
Melville Jessup Weaver recommended greater transparency so consumers knew they were being given fully independent advice.
One of the report's authors, David Chamberlain, said an insured person shouldn't be moved to another company or policy when it was not in their interests.
"Between 40 and 50 percent of business that is written each year is movement of an insurance policy from one insurer to another."
Mr Chamberlain said it recommended a new structure for remuneration that minimised conflicts of interest.
"What we say is that activity, in some instances, may well be in the best interests of the advisor and not in the best interests of the consumer," he said.
He said there were significant financial incentives which would prompt advisors to engage in such activity.
"The advisor can get 200 and 230 percent commission paid upfront for selling a life insurance policy," he added.