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