Posted on 23 July, 2017 at 3:40

We get a lot of people with current Life Insurance enquire about Funeral Insurance, especially as they reach 60-65 (or older). It is a very common, and understandable, question and tends to be asked on renewal of the life cover when a customer sees a year on year increase of 10%, 15% or even more. Unless your premium was fixed until a certain age, life premiums are based on your current age so the older you are the higher the premium. And of course each year you become older so the premium rises.

So, you get an anniversary notice with another big increase on top of all those in previous years. Where to from there? For those who maybe no longer have debt or do not feel the need to provide a lump sum for any other family members then they often consider it best to alter cover to just pay the costs of a funeral. A funeral cover then springs to mind, often in the hope of lower premiums too.

In some cases funeral insurance premiums will be cheaper than you are currently paying for your life insurance but that depends on the levels of cover. But there is one major difference, that is the funeral plan premiums are fixed for life when you commence the cover. So, on day one the premiums may be higher than what you alre already paying but they are not going to go up year on year as you age. At the time of considering this new funeral cover you must also remember your life premiums will go up and up and up and eventually may simply become unaffordable, often at the time you need it most.

The issue we see nearly every time someone consders a move from life insurance to funeral insurance is this cost complication, particularly where the life cover is still cheaper at that time of consideration. All you really can do is to try and project costs out and make a decision based on fixing premiums now or just carrying on with life cover. It is often really tricky with no obvious answer. If you leave the funeral insurance for a few more years then it will be more expensive ongoing at that time because it will be based on your new, older, age.

If we can help you with some numbers we are happy to do so, might make the decision making easier.

Paul Woollams, Funeral Insurance NZ