He did so after using a shotgun to kill Bradley, 9, and Ellen, 6, the children he had with Ms Webb.
"He planned to deprive her of everything - kids and the house," the friend said.
She described Livingstone's descent into violence as "premeditated".
The Herald has traced Livingstone's descent from an apparently loving stay-at-home dad to the "monster" who killed his family and then himself.
He was banned from the family home and committed to Dunedin's Emergency Psychiatric Service after a domestic violence incident on May 27.
Livingstone, 51, twice breached a protection order before returning a final time to the home to kill himself and his children.
Former neighbour Geoffrey Vine said he could not understand how the man he watched lovingly raise Bradley as a toddler could go on to kill him.
"The big unanswered question for me is what drove the transition from a thoroughly nice man to a monster. You don't become that overnight."
A spokeswoman for the family violence agency Shine, Jill Proudfoot, said the cancellation of insurance fitted the theory that Livingstone intended to deprive Ms Webb of everything she held dear.
"There was nothing 'mental health' about it. It was revenge and punishment."
Ms Proudfoot said the case raised questions about support from external agencies, as Livingstone used a key to get into the house through a back door.
Shine advises changing locks and also getting an unlisted phone number. Livingstone's two breaches included telephone contact.
"If the woman in Dunedin [Ms Webb] had all the locks changed, he wouldn't have been able to use the key to get into the house."
Waikato University lecturer and psychologist Dr Neville Robertson said those intent on killing their spouses showed a lifting of spirits as they neared their final encounter.
They approached the end with "plan-filled" behaviour and took relief from the certainty of their actions.
It also pointed to a self-centred view and an attitude of ownership of others.
"It does give us some insights into a broader cultural theme that isn't that healthy."
Letters contradict officials
Letters sent to Ed Livingstone by prison bosses show delays to the start of employment investigations into repeated breaches of protection orders.
The letters are out of step with the Department of Corrections' official explanation of how it handled Livingstone's behaviour towards his wife, Katharine Webb.
Southern regional commissioner Ian Bourke said the "employment investigation and disciplinary process" started after Livingstone told his manager on August 9 that he had been arrested.
Mr Bourke said the investigation was "ongoing through both breaches until the court decision on November 15".
Livingstone's first protection order breach was handled through the police diversion scheme.
On November 15, he was discharged without conviction for the second breach after he said he feared he would lose his job.
Mr Bourke said prison bosses then could "fully consider all of the information".
Livingstone was given a final written warning on December 9.
But the statements are in contrast to letters sent to Livingstone, obtained by the Herald, that appear to show no employment investigation was started until six weeks later than Corrections claimed.
In a September 20 letter, Lane Groen, acting manager of Milburn Prison, tells Livingstone it had been weeks since he had told bosses the "charge was dismissed" and that it should now be formally investigated. Livingstone was then suspended from his job.
On October 14, he was told the suspension was lifted and he could return to work.
Milburn Prison manager Jack Harrison thanked him for keeping prison bosses updated on his arrest for the second breach.
He told Livingstone "the employment investigation will not commence until the outcome [of the second breach of the protection order] is known".
