This is a different question to how much will my funeral cost? For this question you need to consult a funeral director to get an indication of the likely cost for the funeral that meets your wishes. So, this figure could vary widely from person to person.
However, for the question how much funeral cover should I have that there are other factors to consider. For many, cost is a major factor and this is perfectly reasonable. Funeral Insurance should be looked at as a long term commitment only so it needs to be affordable for you for the foreseeable future. So, assuming you can afford the cover what else is important?
Funeral Insurance NZ plans out there have cover amounts from $3000 to $30000. Each insurer offers a different range of covers so some you need to check if you have a certain cover amount in mind as not all insurers may offer it if on the extreme ranges (top or bottom)
Personally, we think the covers of $3000 to $5000 are ridiculous for insurers to offer. Sure the premiums may be cheap but the amount you receive is unlikely to provide much of a funeral especially when you factor in inflation and other possible increased costs over time. Again, look at it in the long term; $3000 in 10-20 years is going to cover even less of a funeral.
For much the same reason, covers between $6000 and $9000 are not ideal. For most people when you buy funeral cover now you will be expecting a reasonable life span (10 or 20 years or more and in some cases for the younger people buying it may be even more). But we do buy funeral insurance because we do not know when that day will come.
So, if you want to have enough cover, down the track when the time comes, a cover amount of $10000 is probably a good starting point and you work your way up if you have more extensive requirements. For some people with extremely modest funeral requirements we appreciate that $10000 funeral cover may be too much, but for many it is a practical place to start.
Paul Woollams, Funeral Insurance NZ