Posted on 27 June, 2017 at 9:20

All Funeral covers in New Zealand have a stand down period of 2 years for all death claims arising from natural causes. So, this is where someone passes away as a result or any illness or because of an age related condition. The distinction is that natural causes is anything that is not a sudden unforeseen ‘accident’.

All Funeral Insurance in New Zealand is guaranteed acceptance with no health questions asked. So, regardless of your current or previous health any New Zealander (or resident) can buy funeral cover as long as they meet the entry age criteria. Because acceptance of cover is automatic the insurers must prevent against the situation where someone with a terminal (or near similar serous illness) illness purchases cover, pays premiums for a few months and then has a claim paid for $10000 or $20000 et.. Most people would appreciate that you could not have a situation where someone with a very short life expectancy takes funeral cover (realistically at the last moment) just to claim shortly thereafter.

While to some this may seen harsh it is actually perfectly fair. Funeral Insurance premiums would be impossible to set if you insured anyone at anytime for automatic cover. For people who are already very ill they can of course buy cover but may see no potential for a full sum insured payment if they do not survive 2 years.

In the event someone does pass away as a result of natural causes in the first 2 years the standard rule is that 100% of all paid premiums are refunded (so this effectively becomes the claim). So, the worst case scenario is that you are no poorer off financially, you do not lose the premiums you paid in this specific situation.

In the first 2 years (and beyond) you are however covered for death by accident. More common exampes would be car accidents, drownings etc. So, the 2 year stand down period does not apply to accidental death.

All funeral plans in NZ have this same 2 year stand down period and refund period (or close to each others criteria for this) so you cannot simply try another insurer for more favourable stand down terms. However, for a reasonably healthy person the stand down period probably sounds worse than it really is. Other than for maybe a sudden fatal heart attack the majority of illnesses you may be diagnosed with will not result in your passing within 2 years. This is especialy so in more recent times with the advancement of modern mediciine. So, all going well with good health now the odds of passing by natural causes within 2 year is not too high.

For those who specifially want life type insurance with immediate cover the only viable option is life insurance. However, unike funeral insurance, the acceptance of this insurance is based on your previous and current health. So, if you are healthy insurance.cover may be easily obtained even for those aged up to 65. Again, unlike a funeral plan that has fixed premiums the life premiums rise each year so may not  be affordable come the age you most need it. And with a life cover if your health is not so good when you apply, especially if you have limited life expectancy then that type of cover may not be able to arranged anyway, especially the more serious the illness issues.

Paul Woollams, Funeral Insurance NZ