Funeral Insurance is a simple insurance cover to help pay your funeral expenses

Funeral Insurance is surprisingly simple to understand and to apply for. That is a large part of its appeal. Funeral Cover is straightforward and designed to be paid quickly because the insurer will not need to check previous heath declarations or review the circumstances of death.

Funeral Cover differs from virtually all other insurance types in that you are not asked to disclose any historical type information. So they are not accessing whether they can accept cover in the same way as they wold for life insurance, health insurance or car insurance.  Acceptance is guaranteed.

As long as you meet the age entry criteria and are a New Zealand citizen or resident currently living in NZ then cover is guaranteed to be accepted. The age entry points differ between funeral insurers; for example at Cigna Life you must be aged between 45 and 80 at the time of the cover being accepted. At AA Life the age range is 50 to 79 and at Pinnacle Life it is 30 to 75. But there are insurers who accept between 16 and 85 so the majority of potential buyers have options even if at some ages they are very limited.

Funeral Insurance is designed mainly just to pay for your funeral expenses although if you take a higher level of cover you can have some money over to pay off some debt or use to assist family members with travel expenses. Or some people just want to leave a few thousand over to help a loved one. Typical funeral covers range from $5000 to $30000 but again it varies from insurer to insurer.

Applications are extremely easy given the lack of pesky questions about any medical history. A number of insurers allow you to easily apply online with cover then issued immediately. If you prefer, the paper application forms are typically 1-2 pages plus a payment form.

 At the time you arrange cover you also nominate a trusted person to receive your claim funds. The cover amount is paid promptly as a tax free cash payment. Simple evidence of death is required by the insurer. You can alter the beneficary at any time if your circumstances alter.

Another reason funeral cover is popular is that the premiums are fixed at the time the policy is issued. So, you know, upfront, how much you will pay every year. So, this means no yearly increases to reflect your new age as you commonly expect with life and health type covers. Some insurers even have a cut off age where you premiums cease and the cover continues for free; 85 or 90 is the common age with some of the more well-known insurers. Then you can work out to the dollar the potential total life time cost of the insurance.

So, if you are a little concerned as to how your funeral costs may be paid then funeral insurance may be for you.

Paul Woollams, Funeral Insurance NZ

Some examples of how Funeral Insurance payouts are being used by the family

One the great things about funeral insurance is that the claim is paid as a tax free cash lump sum to your nominated beneficiary. So, the claim money can actually be used for any reason at all.  There is no requirement to produce invoices etc to the insurance company to be reimbursement as is the case with many overseas funeral covers we hear about.

Funeral Cover amounts typically range from $5000 to $30000. You can select any amount based on what you require the money to possibly cover. We have detailed below some of the things we get told about from our clients from time to time after a claim.

First, and foremost, people select an amount they feel will be sufficient to pay for their funeral costs. A Funeral Director is the only person who can accurately guide you on likely costs. Of course this figure can range significantly. Some require only the most modest of funerals and a low cover amount is going to be perfectly adequate for them. On the other hand some funeral requirements are significant. So, try to determine your likely requirements and use that amount as the starting point for your funeral insurance cover level.

The majority of people tend to stop there when it comes to selecting a cover level. But there are three other main things you may also consider when selecting their cover amount.

Some people like the idea of leaving a token cash amount behind (like an inheritance). This is easier with life insurance (as the cover amount is likely higher) but can still be done to some extent with funeral plans given you can buy up to $30000 cover.

Other customers suspect they may still have some debt when they pass. This could be the small balance of a mortgage, other loan or a credit card. A little extra cover can be taken to allow for this eventuality. If there is no debt at the time of passing this money will just be available to the beneficary anyway so it is not lost.

The most common reason to increase the cover amount tends to be to allow funds to help with travel costs for close family who may live elsewhere in NZ or abroad. Airfares at short notice are often high and cause some families real grief. This is especially the case with those who have family in Australia and the Pacific Islands. With extra cover the costs of travel can be allowed for and then reimbursed.

Hopefully this helps you to determine the cover amount required for your funeral insurance.

Paul Woollams, Funeral Insurance NZ

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