Funeral Insurance NZ benefits and why funeral cover is becoming increasingly popular

The overwhelming benefit of funeral insurance NZ is its simplicity. There are few, if any, insurance types that are easier to apply for and obtain. Paperwork (including the online variety) is kept to an absolutely minimum. You can literally be covered in less than 10 minutes if you wish.

Why is funeral insurance so simple? Well unlike most insurance, a funeral plan in NZ is guaranteed acceptance. So, as long as the insurance company has an eligible product (for your age and assuming you meet citizenship / residency requirements) then cover can be obtained. There are none of your typical questions that are used to determine if cover can be provided.

We mention age as the various insurers do have their own set age groups for cover. For example with AA Funeral Plan you must be aged 50 to 79 at the time of application. For Cigna Funeral Insurance it is 45 to 80 and at Pinnacle Life it is 30 to 75. So, that criteria does vary. All funeral plan insurers do require you to reside in NZ at the time of application and be a NZ citizen or resident.

So, it is really easy to apply for (many options are available online with cover issued on the spot) and there are no pesky invasive questions that often annoy when applying for insurance. So, what are the main reasons people buy funeral insurance?

Unfortunately, not everyone is in a position to have funds readily available to pay for their funeral. Even if you have some money your family might not even be able to access it, or maybe a property needs to be sold before money is available. Others are simply not even that lucky, that will never really be in a position to easily find the funds for the funeral. And one thing we have found over the years is that older folk absolutely dread the thought that their family (like adult sons or daughters) would have to pay for their funeral. And as we know other family may not be even in a position to quickly front a large lump sum either.

So, people are increasingly turning to arranging a funeral insurance policy that will promptly pay an agreed tax free cash lump sum (you choose the amount when arranging the cover) that will promptly provide cash to your nominated beneficiary. They can then meet the funeral costs quickly and without any hassle.

Paul Woollams, Funeral Insurance NZ

What is the difference between funeral insurance NZ and pre-paid funeral plans?

In many instances when people refer to pre-paid funeral plans what they actually want is funeral insurance (also known as funeral cover or a funeral plan). Also, sometimes this expression is used when people want to make a lump sum investment that can be withdrawn at the time of passing.  The two potential understandings are detailed further below.

Sometimes when people say that want a prepaid funeral plan they just mean they want to organise, in advance, some protection by way of insurance. So then can arrange an insurance where they make regular premium payments and in return a lump sum will be paid at the time of their funeral. This is just standard funeral insurance, you pay a premium based on your age, sex and smoker status and the agreed sum insured is paid out. This is easy to arrange and a number of funeral cover providers are available in New Zealand.

The other interpretation of a pre-paid funeral plan is what others may refer to as a one-off investment or a savings scheme. If people have $8000 – $10000 (give or take) ready cash available now some people look to invest so it is available later. There is nothing wrong with this as long as it is not later needed for something else. It needs to be invested and left.

Some people look to save money on a regular basis with a bank or similar so that, hopefully, when the time comes there is sufficient to pay for the funeral. Again, this is possible but you do need to be very diligent to make this happen, The biggest downside to this method is that you may not be able to save at a rate fast enough, for example if you pass away 3-4 years after starting the savings plan then obviously you would not have enough to pay for the funeral.

The benefit of funeral insurance cover over both of these options is that, after any stand down period, the full cover amount is available to be paid out. So, you get over the issue of the timing of death and it also means you do not need to put aside valuable capital upfront for an eventuality that typically you have no control over the timing of.

Paul Woollams, Funeral Insurance NZ

Cigna Funeral Insurance, AA Funeral Plan, Fidelity Funeral Fund, Pinnacle Life Funeral Plan or offerings from AMI, State, Partners Life and others. How do I choose for my funeral cover?

In New Zealand, there are many options for funeral insurance so choosing one for your funeral cover can be something of a minefield. There are the larger insurers such as AA Life, Cigna Life, State Insurance, Partners Life and Fidelity Life but equally there are options from smaller, newer, or niche, insurers such as Pinnacle Life, Legacy Life and Greenwich Life. Plus there are numerous others that in some circumstances may be worth considering too.

Banks may sometimes promote funeral covers but usually just by having a branded product handled by an insurance company. Some of the biggest life insurers like Sovereign, AXA, AMP either do not sell funeral cover or it is largely hidden away somewhere as a low priority.

But it is important to know that each insurer will have different cover benefits, varying age entry points, varying sum insured levels and, significantly, wildly varying premiums.

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Questions for Funeral Insurance NZ?

The only real way to make an informed decision on the best funeral plan option for you personally is to compare a number of different insurers. It is common that people buy one of the first options they see but invariably that will not be the best for them. We strongly recommend you consider the policy benefits and premiums of at least 3 funeral plan providers before making any purchase. Unlike car and house insurance this is not an insurance type you can easily change from year to year due to any stand down period and the manner in which premiums are fixed at the age you commence the funeral cover.

Use a New Zealand funeral insurance comparison site to quickly show you all the options in one place. Such a site will show which funeral plans you are eligible for, what cover amounts each insurer offer and any product benefits. Once you consider that information you can then factor in the premiums as well. The best option will likely become quite apparent at that time.

For detailed comparison information from more than 10 funeral plans including the Cigna Funeral Insurance, AA Funeral Plan and others please click here.

Paul Woollams, Funeral Insurance NZ

There seem to be a few new players popping up in the funeral insurance market recently, what to make of that?

Generally, for the consumer more variety and potential options for any service or product is a good thing. But with anything new it is always sensible to check in to it closely to make sure it is something worth considering. We have all heard of Cigna Funeral Cover and the AA Life Funeral Plan etc just because they have been around for a long while, but what of new names that suddenly appear that you have never heard of?

As insurance advisors we are naturally cautious of recommending insurers who have no history in New Zealand. We want to make sure you can be confident the insurer will be around when you need it, at claim time.  With no evidence to support a new player we take a safety first approach.

So, if you see a funeral plan insurer you have not heard of before we do suggest a few checks. For example one recent player touting for business is registered in Asia and another has all its calls answered, and made, from Australia. So, ask where your money is going, where is their NZ office, will you deal with a NZ office when making a change or when your beneficiary needs to make a claim. All are simple things worth doing.

Also check their financial ratings; can they pay your claim? Who are they financially backed by or reinsured by? (Some not so well known names are actually fronting for bigger insurers like AIA or Fidelity Life).  You can even google them and see what comes up, maybe all you see is negative feedback or lot of compliments?

In New Zealand, when it comes to funeral insurance the names who have been around for a while and who are likely to be trustworthy and around when you need them include; Cigna Life, AA Life, Pinnacle Life, Partners Life, Fidelity Life, State Insurance and AMI Insurance. This list is not exhaustive and other insurers are likely to be just as good but maybe not so well known as yet.

So, if you are looking at funeral insurance and a name pops up that is unfamiliar then make some good enquiries about them before placing your important business with them. With insurance often your best options are the tried and tested ones.

Paul Woollams, Funeral Insurance NZ

What are the best funeral insurance options for those aged 50 or less?

If you are aged 50 or under and are in reasonably good health you probably have a number of options available to you. There are different insurance cover types that could be considered.

If you want some insurance cover solely for the purpose of covering your funeral expenses, with premiums that stay the same, then standard type funeral insurance is available at a fairly low cost (the long term fixed premiums are determined by your age at the time of the policy commencement, so the younger you are the lower the premiums). A number of the well-known funeral plans are not available until age 50 (or 45 for Cigna Funeral Cover) but some options, for cover at say 30 plus, do exist such as with Pinnacle Life, Greenwich Life or the Fidelity Life Funeral Fund.

The beauty of funeral insurance for the under 50’s is the fixed premiums, no health questions asked (so guaranteed acceptance) and easy online applications in many cases. It is easy to get and easy to understand. Ideal for low cover amounts just enough for your funeral expenses.

Some people aged 50 or under may consider a standard life insurance instead. Premiums are often lower than for funeral insurance with higher cover amounts. There are two main differences between life insurance and funeral insurance though. Life Insurance requires full medical disclosure (effectively from birth) so acceptance of cover is not always possible if your health dictates. Secondly, premiums increase yearly so medium to long term they can get higher than a funeral cover.

Some insurance people advocate life insurance with fixed premiums to age 80 as an alternative to funeral insurances. But we see one fundamental flaw in that. It then means that at age 80 your premiums jump to the standard premium for an 80 year old and then increase significantly each year. So, at the very time you realistically most need the funeral cover you will probably have to cancel and it is then too late to get funeral cover.

Either a funeral plan or life cover is an option if you are aged under 50 (in fact you can increase the age 50 to higher if you wish with the same rules). Just be aware of the differences and long term benefits.

Cigna Funeral Cover, AA Funeral Insurance or funeral plans from Pinnacle Life, Fidelity Life, State, AMI, Partners Life?

There is plenty of choice out there when it comes to funeral insurance in NZ. Surprisingly, however some of the biggest insurers however do not actively promote funeral covers. Funeral Insurance is actually more of a niche market type insurance so some smaller, less well known insurers are often your best option. So, in that category you can factor in Pinnacle Life, Greenwich Life, Legacy Life as well as some of the big players such as the Cigna Funeral Insurance and the AA Funeral Cover.

Funeral Plan premiums do vary significantly between insurer and insurer. No one insurer has across the board lowest premiums as one funeral cover may be competitive in one age group but not another, or maybe competitive for low cover amounts but not higher. So, you really do need to compare a minimum of three funeral covers before you make a decision. When comparing you need to look closely at the premiums and the policy conditions. Again, while covers follow a similar theme they do also vary between insurers.

When comparing funeral plans we do recommend you consider how long premiums are payable for. As an example at Pinnacle Life you pay premiums then cover continues for free. With the Cigna Funeral Cover and the AA Funeral Plan you instead pay until age 90 before premiums cease and cover continues for free. Factors such as this can save huge amounts of money in the long run.

Each insurer has their own age entry criteria too so it is possible that you may not even be able to obtain funeral cover with a certain insurer depending on your age. For example at AA Funeral Cover you must be aged 50 to 79 at the time the policy, it is 45 to 80 with the Cigna Funeral Cover, 30 to 75 for the Pinnacle Life funeral cover. The general rule of thumb is that there are insurers available from age 16 to 85.

The amount of cover also varies between funeral plans but the typical range is from $5000 to $30000.

For a detailed comparison of 10 plus funeral plans you can click here.

Paul Woollams, Funeral Insurance NZ

Funeral Insurance easily explained for those who are not aware of this insurance type

Posted on 1 April, 2018 at 2:45

Funeral Insurance is a very simple insurance type designed specificially to cover the costs of your funeral; therefore alleviating the financial pressures on your partner or children who might otherwise be left with having to find a significant sum of money at short notice. So, put simply funeral insurance is a cash payment made upon your death to help with funeral, or related, expenses.

You can select a cover amount which is typically between $5000 and $30000. The amount you select is normally based on your budget and likely funeral requirements. You would need to check with a funeral director about what costs to expect for your specific requirements but we can advise that about 80% of our funeral cover customers have selected $7500 or $10000 when buying their funeral plan NZ.

When selectng a cover amount you can also consider a higher amount than the likely actual costs of the funeral. Sometimes our customers take cover at the higher level (say $25000) if they feel they may have some small debt they want to clear (maybe credit ard debt or small loan) or in a number of cases we see increased cover to provide some money for families or friends who have to travel from elsewhere in NZ or overseas at short notice.

There are a number of NZ insurers who sell funeral insurance. Some of the biggest insurers do not actively promote funeral covers and some of the best options actually come from some of the smaller, less well known insurers, as funeral insurance nz is actually somethig of a niche type insurance. So, some specialist insurers exist which are great options for you but might not be so obvious to you when you first start to search for funeral cover. We can provide comparative information about the insurers who may provide the best options for you.

Funeral Insurance NZ is popular for two main reasons. First, acceptance of cover is guaranteed as long as you are a NZ citizen or resident currently residing in NZ and if you meet the age entry points. Funeral covers offered by various insurers differ in terms of the ages at whcih cover can be obtained. For example to buy Cigna Funeral Cover you must currently be aged 45 to 80, AA Funeral Plan 50 to 79, Pinnacle Life Funeral Cover 30 to 75 and so it goes on between funeral insurance providers. We can guide you on all the options, depending on your age you could have numoerous or limited options. Sorry, but if you are 86 or older there are no options.

Secondly, there are no health questions asked when applying for funeral insurance, acceptance is guaranteed without the need to disclose any health issues. This applies to previous conditions and also there is no need to disclose anything that arises in the future. Just to make sure the claim process is simple the insurers all aim to pay out within 48 hours of the necessary evidence claim being received. The money is then paid as a cash lump sum to the beneficiary you nomimated when you took out the funeral cover.

So, funeral insurance is largely available for anyone 30 to 85 with a range of insurers (some niche insurers to consider also) and cover can be obtained for amounts right up to $30000 easily. The application processes are simpe often with online appication or just 1-2 page paper forms.

Paul Woollams, Funeral Insurance NZ

How can my Funeral Cover claim proceeds be spent?

Posted on 21 February, 2018 at 23:35

A nice simple answer here, the money can be spent any way you want. The insurer will promptly credit your chosen person with the cover amount as a tax free cash amount. This is paid directly to their bank account as soon as all claim documents are approved. The involvement of the funeral plan provider then ceases, they are not involved in distribution of money which happens in some overseas funeral insurance type policies.

We always recommend the person taking out the cover has a good talk with their beneficiary, when the policy is taken out, so everything is understood in terms of what the funeral cover money is subsequently to be used for.

While the simple answer is that the claim money goes to pay all your funeral costs that is not all it is typically used for. Our customers have told us that other reasons for talking funeral insurance include the following;

Firstly, and of no surprise is that your funeral costs such as any cost of cremation or burial are fundamental uses of funeral insurance together with paying for the service. Often there will be a gathering (where the funeral is held or at a private home) and they can be significant costs when catering for a large group.

It is not unusual to have family or close friends who live in Australia, Pacific Islands or just elsewhere in New Zealand. So it is common to take a higher sum insured to provide funds to help people travel at short notice where the costs can be high. Cover of up to $25000 is often sought to help for this reason. Particularly so for our NZ based Pacific Islands clients who will have some family residing overseas more often than not.

There is also a chance the customer may leave behind some small debt, eg a personal loan, hp or credit card debt. So, by taking a small amount of extra funeral cover that debt can be repaid at the same time as all other costs are being handled.

For these main reasons it is vital the insured person and their named beneficiary have spoken about any expectations to make sure the funeral insurance money can be used as ideally as possible.

Paul Woollams, Funeral Insurance NZ

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What makes Funeral Insurance in New Zealand so attractive to the 60 plus age group?

Posted on 19 February, 2018 at 21:40

Customers often let us know that one of the real advantges of funeral insurance is that the premiums are set at the time the policy starts. So they know exactly how much the funeral plan premiums will be when they choose to purchase the insurance. There are no annual increases as you get older and no unexplained increases because the insurance company suddenly makes a change to their premiums.

Insurance clients aged 60 plus are the most heavily affected by age related increases to premiums with life insurance and health insurance in particular, so the certainty of funeral insurance premiums is very benefical to them. Funeral Insurance cover has a big advantage over other insurances because the ongoing premiums are known upfront with no hidden surprises. You can then make an easier decision whether to buy a funeral cover or not knowing this at the start. .

A further reason for funeral cover NZ to be so attractive is how easily it is to obtain. Funeral Insurance is guaranteed acceptance for NZ citizens and residents who now live in New Zealand. You just need to meet the age entry points of the insurer for your application to be accepted. You are not asked about your medical history or any other criteria that will influence whether funeral cover can be accepted or not. This is different to life insurance and health insurance that asks for full disclosure of all lifetime medical matters.

Funeral Insurance applications are easy. Many funeral plans can be applied for online and if not then it is a simple one page type application form.

Funeral Cover customers also appreciate that the claims are paid out as a lump sum to your chosen person very promptly. Typically within 48 hours of all required documentation being supplied to the insurer the claim proceeds are in the hands of your beneficiary so they can pay the funeral expenses promptly and without any stress.

Paul Woollams, Funeral Insurance NZ

If I currently have funeral insurance (held for some time) am I likely to find a new funeral cover NZ that is better for me?

Posted on 11 February, 2018 at 5:20

Usually the answer to this question is NO. If you currently have a standard funeral insurance then the odds of being able to replace it with a new funeral plan on better terms and premiums now is low. This comment assumes your current funeral cover has been in existance for at least a few years.

There are two main reasons your current funeral cover may be better value;

1. All ‘standard’ funeral insurance policies sold currently come with a two year stand-down period for claims arising from death by natural causes (death by accident has no stand-down). So if you take a new policy today then you will have another 2 year stand-down period to go through. So, if you are already passed this period with your current insurance then this is a serious disadvantage. We do not recommend you start again with the stand-down period unless the premiums or other terms of a new policy are so beneficial that they outweigh the disadvantage of a new stand-down period being taken. Another valid reason to change funeral insurance could be if your existing one has a date or age it automatically ceases.

2 Currently sold funeral insurance premiums are based on your age at the time that  the policy commences. So, if you are 65 then there is a premium based on that age. And if you are 55 there is a lower premium based on that age. So, if you are now 65 and you took a policy out 10 years ago (at age 55) then the premiums you are paying now will, most likely, be set at that original age of 55. Standard funeral insurance premiums are fixed for life so that policy bought 10 years ago should be cheaper than buying now as you get the advantage from buying at a younger age. An exception to this rule could be if your current policy does not in fact have fixed for life premiums.

It is very rare we find a new funeral cover is better than your current one but if you want to check just in case then please complete our online enquiry form. Also, if your current funeral plan was only taken out very recently, say in the last few months, then better options almost certainly exist.

Paul Woollams, Funeral Insurance NZ