|Posted on 3 December, 2017 at 2:45|
It is important to understand that your funeral insurance claim payout is a cash amount that can be spent at the discretion of the beneficiary. You do not have to account the the insurance company how the money is spent. Once they have accepted the claim the money is deposited with the beneficiary and that is the end of their involvement.
We recently had a customer pass away and they had a cover amout of $25000 . Now, such a cover amount is not common amongst our customers. To be honest the majority select a sum insured of $7500 – $10000, just with an intention of covering the funeral costs. But, a higher level of cover is available for those who wish to have it. Some insurers provide cover as high as $30000.
Just in case you were thinking about whether to take a higher level of cover here is an approximation of what this particular customer had their claim payout used for. The funeral was a reasonably large affair as theirs was a large extended family. So the funeral itself was about $12000, Some family reside overseas so it was always planned to use some of the claim money to help them with airfares. This totalled around $5000. The customer also had a small amount of debt of around $5000 from a current car loan.
So that was around $22,000. We understand the small balance was just used for family to plan some memorials. So, in this case you can see the value of funeral insurance that was taken for more than just the likely cost of the funeral. Had they just taken $7500 or $10000 there would have been a lot of cost extra to be covered by other means.
Paul Woollams, Funeral Insurance NZ