funeral insurance new zealand - compare funeral cover plans   

An article recently appeared in the media suggesting funeral insurance was not a worthwhile purchase and instead people should just now put a lump sum of money aside in a separate bank account so it can be used at the time to cover your funeral expenses. 

If you have $8000 - $10000 spare cash (or maybe up to $15000 depending on your likely funeral requirements) and you will never miss this money again, ie never want to use it when other money runs tight) then we 100% agree that putting that money aside in a saving account is a better option than taking out a funeral cover. Remember however to make sure it can be accessed by others once you have passed, for example by using a joint bank account. 

What the article however fails to understand that the very reason funeral insurance exists is because many people do not have that amount of cash readily available to just put aside and never use again. And at age 65, say, do you really want to tie up that money for what could be 10, 20 or even 30 years?

I would suggest that very few people who currently take out a new funeral insurance in New Zealand, have large cash sums available at the time they buying this insurance. Those people do not typically buy a funeral plan already so the article was not really helpful in that regard. Funeral Insurance, like most insurances, is a very reluctant purchase. No one takes much joy in paying for insurance, I certainly do not enjoy and I am a advisor who understands better than most the value of funeral covers as we see the benefit come claim time for our customers.

Funeral Insurance is beneficial to anyone who knows that at the time of their passing the costs of their funeral will present some financial difficulty to those left behind. We accept that cost  is a completely separate factor and that there is obviously a premium to pay which can prevent this type of insurance being for everyone. Sadly, some of the people who most need funeral cover are the same people who can least afford it. 

If you have ready cash to put aside for your funeral then that is a good idea and we encourage to do this. But, don't spend it when the car needs repairs or you need a new hot water cylinder etc! If you do not have a spare lump sum check out funeral plans as there might be something suitable for you at a cost you find affordable. 

Paul Woollams, Funeral Insurance NZ

The reason funeral insurance is available is so people can receive a cash sum of money to provide immediate help to pay their funeral expenses. So, it stands to reason that the nominated beneficiary is someone trustworthy and close to you. And ideally it should be someone you expect will live longer than you do.

As a general rule for a joint policy the beneficiary is named as the spouse. If one partner passes away then the money can be paid the the spouse which is often the most obvious person to take the main responsibilty for the funeral and associated costs. As the beneficiary can be altered at any time it then simply means that if one partner passes then the remaining insured person would then nominate another person (as their spouse would be around then). 

The only potential issue with this is that if both insured persons die at the same time then the money would have to be paid to the estates which would delay things. However, this is typically only likely in the event of an accident so it is unlikely. If this is something that worries you then you would nominate another person, maybe an adult son or daughter to prevent this being an issue. 

For a single applicant the beneficiary is normally an adult son or daughter or in the event there is no family then a trusted friend.  

In some instances we get a family member, say an adult son or daugther arranging cover for their parent(s). In this instance they often also take responsibility for being the nominated beneficiary. 

Funeral Insurance is ideal for anyone who knows there will not be quick and easy access to funds of maybe $7500-$15000 to cover the costs of a funeral. This could be funds from yourself, a surviving spouse or dependants. 

In many cases people do have assets such as a house but this in itself will not mean easy and quick access to funds is available. If there is a surviving partner you cannot rely on proceeds of a house sale or taking a loan against the house. If the person who has passed does not have a partner. and owns a house, then it is true that some funds may be available in due course. However, that would rely on the house sale process and it might mean the sale proceeds may not be available for a considerable time. A funeral would need to be paid almost immediately in most cases.  

So, waiting on money from a house sale is unlikely to assist in the prompt payment of any funeral expenses. A funeral insurance plan mght be sensible even if funds may be otherwise available eventually.   

There is also the situaton where the person who passes away may have money but it may not be available to others to access. It may take some time for it to be available if there are issues with a will etc. Other than funeral insurance being in place someone wtth funds can look to open up a bank account for the specific purpose of covering funeral costs but they must make sure the account is a joint one with the other person having full access to withdraw funds with their authorisation only. This is very rare that this occurs, mainly as it is hard to plan in advance. 

There are a lot of providers of Funeral Insurance in New Zealand so the ability to easily compare their products and premiums is of significant value to a consumer. A funeral cover comparison quickly allows you to see the difference in cover between one funeral cover and another. 

Funeral Plans, while largely based on the same idea, ie a cash payment to assist with funeral expenses do differ between quite a bit from one insurer to the next. In fact unless you spend a few hours surfing the net and browsing all the various insurer websites you will never know what is out there and who provides what!. 

The team at Funeral Insurance New Zealand provide a specialst Funeral Insurance comparions site. We are aware of the funeral cover provided by up to 10 insurers at one time. We have an easy to read, two page comparison chart, for your information that you can view here.

Funeral Plan premiums especially differ from one insurer to the next, this is just about competition and based on their own claims history.  So it pays to check out at least 3 insurers to see what they offer policy and premium wise. Do not just go with the first one you come across just becaue you see them advertising every day. The big names are not necessarily the best as Funeral Insurance NZ is a niche market with policies provided by some insurers who are not so well known. They may just specialise in Funeral Plans and are really good at it. 

So compare polices and premiums for funeral covers and reap the rewards with a great cover ideal for your needs. 

When we look at the last 100 or so policies we have assist our clients with we see the most common age range is 60-65 for the policy holder. Of course we have people in the 40's, 50's, late  60's and 70's who feel cover is important too. There is really no particular age that is ideal for people to buy.

Buying in the 60's age bracket does tend to make some sense though. Typically that is the sort of age range when people start thinking a bit more seriously about their long term commitments and also appreciate that the years are passing by and some financial planning may be important. Many people in this age range are still working full time or part time so affordability, certainly in the short term, is less of a concern than say a 70 year old. 

Funeral Insurance premiums are also based on your age at the time the policy commences. So, obviously the older you are, or later you leave before buying, this will affect the premiums you pay. Premiums in the 60's tend to be reasonable still as they still assume you have a good number of years ahead of yourself. As you age the premiums get higher as the average life expectancy remaining for you will be reducing.

Other than just based on your age, cover is typically sought by people who simply know that, regardless of their current age, the funeral payment will be difficult either for their spouse, adult children or for money they can leave behind. Many older people hate the idea that when they pass away it will be a financial burden to their family. And, realistically, in many circumstances this will be the case to some degree. A funeral insurance, although an ongoing financial commitment most people will not prefer not to have, is often the best option to provide some certainty that their funeral costs can be met when the time comes. 

It is definitely possible that the amount you pay in funeral cover premiums over a period can be more than the sum insured amount. But, the good way to look at this is that if this does occur you must have lived a long life, almost certainly quite a few years more than the average life expectancy. 

Funeral Insurance is not alone in this potentially happening though. For example the writer, at age 55, has had health inusurance for nearly 30 years and I am happy to say have never had a claim. It is possible I will never have a claim but I would rather this situation of paying premiums and not claiming than the other way around. The difference between health insurance, and other covers, where it is possible you will never claim is that there will be an inevitable claim on your funeral insurance. So, even if you end up paying more than the cover you still will benefit form the claim payout eventually.

We do, however, like the idea of the funeral insurance covers that have an age cutoff where premiums cease and cover continues for free. There are options that exist like this at age 85. So, in those cases even if you have paid more than the cover amount this premium cutoff at least caps the amount of 'extra' payment.    

There is of course another way to look at this, it is unfortunate but there are some people who will pass away before they have paid the cover amount in premiums. For example someone with $10000 cover may have only paid a small portion of that amount if they passed away, let's say, 3 years after the funeral cover commences.  

Funeral Insurance is no different than any other insurance in that you take the cover to protect against the unexpected. If it was guaranteed you would pass away at a certain time you would not need funeral cover as you could plan in other ways. You take a funeral cover so that there is money for your funeral whether it be needed sooner or later. 

Some people suggest a saving scheme is superior to a funeral insurance. In hindsight if you are still around in 30 years you might think this was better but the strong negative is that it is impossible to save at a rate fast enough if something were to happen sooner rather than later. And, from what we get told this money that is being saved for a funeral would also be the first to go if the car needs repairs, or more major house maintenance is required.   

Paul Woollams, Funeral Insurance NZ

In the course of our work we do speak with many people looking for funeral insurance. There are obviously many specific reasons people may be considering a funeral cover but largely the over-riding thing we hear all the time is that they want to make sure their spouse or children are not lumbered with the significant financial burden of paying for their funeral when the time comes. 

Most older Kiwis are very sensible about their money matters as they have had to work hard for what they have, whether it be a little amount or a lot. We are also very family orientated and none of us want to see those left behind struggling to cope with the not inconsiderable costs of a funeral. This is especially important when you consider the grief the family are already under. 

Unfortunately, many people are not in a position to have, say $10000, left aside sitting in the bank to cover funeral costs. Some people are also asset rich but cash poor so while they may own their house, any cash on hand may not be significant. And Mum cant sell the house to pay Dad's funeral costs!

So it is very much an inbuilt need to protect those close to us that sees people looking to buy funeral cover. The number of times we have heard that people could not bear the thought of their spouse or children having to try and find lots of money in a short time is signficant.

Having the money ready within days, from a reputable insurer, so that the costs of a funeral can be met does seem to give a lot of older Kiwis a sense of peace of mind and they are prepared to make a monthly insurance commitment to get that financial protection. 

Paul Woollams, Funeral Insurance NZ

Only a Funeral Director is qualified to provide advice on the likely cost of funeral, in particular to meet your own personal expectations. However, if you browse various websites you see many organisations comment that somewhere between $8000 and $10000 is likely to cover the cost of most standard funeral services (including a ceremony and cremation). But equally we hear that the cost can be much more or a little less, it very much depends on your location and what you see as being important to include. 

The vast majority of our customers tell us they want $7500 or $10000 cover. Probably around 80% of policies our clients take are for those cover amounts. Some clients select $5000 for a very basic service although we suspect some choose that level of cover as it meets their budget which s also a very important consideration. 

The good news with funeral plans in NZ is that the cover amount is paid out as a cash settlement to your nominated beneficiary. So, if you select, say $10000, and the cost of the funeral is less than that extra money can be used by your beneficiary as required. 

It is also common for people to take a cover amount more than the likely cost of the funeral in order to have a small amout extra to clear such things as credit card debt or other small loans.It is also common, especially with our Pacific Island customers, to take extra cover to help family members who might want to travel to NZ from overseas or just also where lots of family have to travel from various locations in New Zealand. 

Paul Woollams, Funeral Insurance NZ

We get many enquiries from family members who want to arrange a funeral cover for their parents (or parent). This is especially so with Maori or Pacific Island families where the cost of a funeral can be significant. We welcome all such enquiries as we are experienced in helping in these cases and understand the difficulties that can arise with arranging such cover.

We find there are two main situations that arise. First, cover is required and the parents are ready, willing and able to sign an application with or without family help. This is the easy part. Secondly, and more difficult, are the situations where the parents are unable to apply and sign due to health issues (say related to old age, dementia or other illnesses) or where they are simply uninterested and do not want to have any to do with a funeral insurance. 

Most funeral plan insurers require the insured person (ie the parents) to sign the application form. Where they can, then many options exist and we can provide quotes from a range of insurers for you. You can always assist the parents with form completion but they do need to sign declaring everything is in order. A family member can also be shown as the beneficiary and be the one to make the premiums payments if they wish. We can guide you through all this. 

Where the parents are unable to sign you can arrange cover but you do need full Power of Attorney with copies to the insurers etc. This can make the application process a little cumbersome. In some instances health or other issues prevents a parent applying yet there is no formal Power of Attorney. 

In the situations where a parent cannot or will not sign there is an insurer option we can source, but the parent does need to be aged 50 to 79 to qualify.In this situaiton another family member can be shown as the 'policy owner' and the parent can just be shown as the person to be insured but they do not have to sign (or in fact even be aware of the insurance). The other family member (close relative only) can then sign as policy owner. We find this option extremely handy for these sorts of situations. 

Let us know if we can ever help if you fall in to one of these categories and require some guidance or specific advice.

Paul Woollams, Funeral Insurance NZ