Kiwis Judith and Charles Cairns, pictured with their grandchildren, paid premiums for nearly a decade in Australia on a policy that wouldn't cover them.

Kiwis living in Australia could be covered by worthless insurance, with some policies excluding New Zealanders.

Judith and Charles Cairns discovered they had paid the ANZ bank $20,000 over nearly a decade for life insurance that would never pay out because of their residential status.

"Our money is the same as Australian money, it's just straight discrimination," Charles Cairns, 58, said.

The Western Australia-based pair have now taken a complaint of racial discrimination to the New South Wales Anti-Discrimination Board which is investigating. Meanwhile, ex-pats groups have warned many Kiwis could be at risk, paying for useless life and income insurance.

But in correspondence included in the complaint, an ANZ lawyer said the couple, not the bank, had mistakenly identified themselves as permanent residents. The lawyer said claims the policy discriminated based on race or nationality were "misconceived" and refused to change the policy. ANZ did not provide further comment before publication.

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The Cairns moved to Australia in 2004 and soon afterwards purchased life insurance, valued at $200,000 each, from OnePath, which is provided by ANZ bank.

Like most Kiwis that reside permanently in Australia, the couple are not technically permanent residents. Instead they were granted "temporary" visas only offered to New Zealanders that allow them to work and live in Australia indefinitely but excludes them from many social safety nets.

While the couples' daughter-in-law was checking their finances earlier this year, including their life insurance, she noticed a change to the policy wording in 2006, which specifically excluded non-permanent residents. When she raised this with the bank, a lawyer replied that the couple had never been covered by the policy for which they had paid thousands in premiums because they were "not citizens or permanent residents of Australia".

Cairns said this was despite ANZ telling them they were a permanent residents when selling the insurance.

"I believed I was a permanent resident and entitled to insurance. Why wouldn't I be?"

The bank refunded the 10-years of premiums this year and, after the Cairns went to the media, offered them a new insurance policy. However, the policy of excluding other Kiwis remained and Cairns believed there were potentially many Kiwis paying for insurance that provided no protection at all.

"Kiwis are being shat on in all sorts of ways here. This is my way of taking a stand, people need to know."

While Judith has managed to get new life insurance, Charles said he had since suffered stroke and was finding it more difficult. Most policies were far more expensive and contained exclusion for any stroke-associated death.

Maureen Unasa, of Kiwi rights group OzKiwi, said she was aware of at least one other Kiwi who had made an insurance claim only to be told they were not covered. The law around permanent residents was "open to interpretation" and the life and income insurance industry did not have an united position on covering Kiwis.

"If you are a Kiwi living here you really need to make sure you're not excluded."