Insurance Blog

Funeral Insurance in New Zealand is designed as a hassle free, fast, cash payout to your nominated beneficiary

30 October 2017 12:11am

Funeral Insurance NZ (also known as funeral cover NZ, funeral plans NZ) is not an insurance type as common, or as well understood as life insurance, car insurance etc. But it is becoming more and more sought after as people start to realise what a straightforward insurance it is and how necessary the benefit is.

While we happily pay for our car insurance, house insurance and other types of cover the reality is that you may never ever claim on those covers. For example, this writer has not had a car, house or health claim in 30 years which of course I am extremely grateful for but it has been a lot of premiums I will never see again.

While not the best dinner table chat the reality is that my funeral insurance is a little different in that sooner or (hopefully) later a claim will be made and the benefit of the funeral insurance will be there for the family.

Depending on your life span you may pay less premiums than you receive in a claim (your sum insured) but if you have a very long life you may also pay a little more in premiums than your cover amount, but this is a good thing from a nice long life point of view.

We tend to recommend, where possible, funeral insurance covers where there is some cut off age for premiums ie there are options where you pay to age 85 and then cover continues for free thereafter. These covers help to lessen the odds of paying too much more in premiums than the sum insured.

People often do not realise that funeral insurance in New Zealand is guaranteed acceptance with no pesky health questions and that the premiums are also fixed at the time the policy starts so you never have to worry about future premium increases.

From our experience, claims are also paid quickly and easily as the policy does not have health declarations to verify as with the likes of life insurance. Claims are typically paid to your nominated beneficiary within 48 hours of all the required information being provided to the insurance company (as the requirements are not onerous).

 

A real-life example of how funeral insurance can so beneficial to you and your family

18 September 2017 8:44pm

Okay. let me use myself as the test case. And yes I do already have funeral insurance. I am 55 years old, male, separated (and single) and a non smoker. I am in good health and particularly on my fathers side the men have enjoyed long healthy lives. I hope to be around for a while but who really knows? My mother died at age 43 and my ex wife from a short illness this year aged 54.

So why funeral insurance?. Although I have some money in the bank no-one but myself has access to it so if I die it will be tied up in probate, will settlement etc and may not be available to my adult children for at least 6 months. My kids, collectively, would not have enough money in their banks to pay even half my funeral costs.

My family would have to beg or borrow to pay for the funeral, that is something I would never forgive myself for. I could open up a bank account in a joint name with one of my kids so they could immediately access but I prefer to leave all my money aside so I manage as I need to in accordance with my lifestyle.

So, paying a reasonable monthly premium to an insurance company gives me peace of mind that my kids will never have to worry about how to pay to bury me. They can just go through the process but at least have no financial burdens weighing on their minds at the same time.

The number one reason people give us for buying funeral insurance is so a spouse or other family is not burdened with the, often, sudden costs.

Paul Woollams, Funeral Insurance Helpline

 

Who buys Funeral Insurance? what age groups etc actually purchase cover?

5 September 2017 6:48pm

The ages of those who buy funeral insurance is surprisingly diverse. For a real life snap shot here are the ages and sexes of the 10 most recent policies we have arranged for our clients.

Male (70) and Female (67)
Female (57)
Female (48)
Male (72)
Female (65)and Male (67)
Male (53) and Female (46)
Female (70)
Male (55) and Female (52)
Female (60)
Female (59)

This is a one off snap shot so you can read in to it whatever you wish but interestingly 5 of the 10 were for individual females and the ages ranged from 48 to 70. A lot of people think funeral insurance is for those 65-70 plus but a lot of people younger than that also see benefits, one of which is that the fixed premiums are set based on your current age so the younger you are when buying funeral cover the lower the premiums indefinitely.

Realistically affordability may be easier if you are still working too which may assist the under 65's to buy. Those over 65 tend to look at the lower cover levels for affordability reasons.

 

Funeral Insurance is paid as a lump sum cash payment to make it easier for your family

24 August 2017 4:52pm

When the time comes for your funeral insurance claim payout the good news is that the money is paid in a simple cash lump sum to your nominated beneficiary. So, that person can use the money to meet what ever expenses are necessary with your funeral or related matters.

For some reason, there seems to be a common misconception that at claim time you have to present funeral home invoices, bills for flowers etc to the insurance company when you claim. This is just not the case, maybe that occurs overseas but in NZ whatever sum insured you select will just be paid to your beneficiary.

We also suggest to our clients that after the funeral cover NZ has been issued that they make sure their beneficiary is provided with a copy of the insurance policy so they know exactly who to contact when the time arises.

It is also worthwhile to have a quick chat at the same time between the two just so the beneficiary is aware of the intentions for the money. While in an ongoing illness type situation there is time for some planning to be discussed that may be possible in the event of an accident or sudden major event like a heart attack.

When determining your level of cover with funeral insurance you can either just take am amount that should be sufficient to pay for your actual funeral or you can take that amount and add to allow for maybe cover some sundry bills you may have at the same time like a credit card, HP, small balance of a loan etc. Some people who have family more far afield often add a bit extra to allow for some of the money being used to help with travel costs for those out of town, or out of country.

 

Funeral Insurance premium payment method by internet banking or automatic payment now available

14 August 2017 6:55pm

We find that many people aged 60 plus have a real aversion to paying funeral insurance (or any bill for that matter) by direct debit. We are not quite sure why but maybe it is because that age group prefer to control the payment requirements more than leaving it in full control of the service provider.

Most funeral plans allow only payment by direct debit, and to be honest the insurers mainly do it for their own benefit as it saves them a lot of administrative time, but that is not user friendly to customers.

One of our preferred funeral cover NZ insurers will allow you to pay your funeral insurance by internet banking or automatic payment at no extra cost. They allow you control the payments as they understand that when on a fixed income it is not always easy to fit in to a pre-determined payment schedule of a certain day (often of the insurers choosing).

With this option you just have to make sure your payment is received by the funeral insurance provider before the end of the month it is due. So, it can fit around other bills or when an income or superannuation is received.

If payment by internet banking or automatic payment for your funeral insurance is important to you please enquire with us, fill in our online enquiry form and we will include details of this option in any information we email you.

 

Funeral Insurance is highly under-rated and the advantages are not always understood well

10 August 2017 6:56pm

The main reason funeral insurance exists is that we do not know when we will pass away, therefore on the basis that it could be sooner, rather than later, we need to prepare for that unfortunate eventuality. That pretty much sums up insurance. It is there for the unexpected. But if you live a long life the cover is still there for you too.

Most people who buy funeral insurance do not have a large lump sum of money sitting aside that can be used for such purpose when the time comes.

Funeral plans mean you do not have to save the money for your funeral, and of course you can never save at a faster enough rate to counter passing earlier in life than expected. Once cover is in place you have some assurance that money is available for your funeral.

The misinformed information about funeral insurance is that it is a poor substitute for saving for your funeral and that it potentially costs more over time than the amount of cover. This assumes that funeral insurance is a savings scheme, it is not it is an funeral insurance policy. You take it to protect yourself whether it is needed in 3 years or 20, either way it is there when you need it. It is not like saving $10000 for a holiday and when you reach that target you go away. With your eventual funeral we do not know when that will be.

Lets hope your passing will way down the track, if so your claim will just be paid at that time, you do not lose your sum insured. The worst case scenario under some policies is that you may pay more in premiums than your cover amount if you live a long life, if that is the case I say, good I would rather have the long life!

If you do not have large lump sum of cash on ready stand-by or cannot save a large amount quickly then funeral insurance may be an option for you.

 

How much Life Insurance do I need? and when do I need it?

1 August 2017 9:59pm

So called experts say the number of people without Life Insurance is far too high in NZ and as a nation was are under-insured in this area. But in reality there are large chunks of the population who simply do not require life insurance anyway.

Children obviously, those younger adults without debt and / or dependants and at the other end of the scale, the much older people without debt or where their sons or daughters no longer need your financial assistance to survive after you you have passed. So, that is a fair chunk of the population anyway.

So, those with debt (we really mean a mortgage) or with dependants who would be seriously financially disadvantaged if you were no longer around make up the majority of people who need life insurance.

To us, the number one rule about how much life insurance you have is based on affordability. Sure, in a perfect world you might need, say $500000, but if that is a financial strain now then it is better to just take what you can commit to. Otherwise you will simply cancel it down the track anyway and have nothing. So, take what you can afford.

But, assuming you can afford the premiums try to get enough cover to clear your mortgage in full and then add an amount you feel would adequately financially assist your spouse or dependants for the foreseeable future following your passing. Ideally at least enough to provide a source of replacement income for 2-3 years to allow life to go on over that time.

If you have three children under 5 and a big mortgage then a significant size life insurance would be sensible but if your mortgage is now small and your kids are finishing high school then a whole different, potentially lower, amount of cover may be all that is needed.

Life cover can always be reduced too later, so as changes in your life occur your life insurance amount can be altered too to suit.

 

A example of why funeral insurance can be so beneficial, hoorah for funeral cover!

28 July 2017 6:06pm

Some years back a Samoan family purchased a funeral plan for their mother. This ended up being a real financial benefit to them when she eventually passed on.

Before arranging this funeral cover for the mother, their father had just passed away. The cost to the wider family had been significant at that time due to the large numbers of family in New Zealand and from Samoa who wanted to attend. Some of the Samoan based extended family did not have the ready funds to pay for flights so this also fell on the rest of the family to help them. There was no funeral insurance for the father at the time.

Funeral Insurance was arranged for the mother at $25000. The family helped her with the paperwork and they arranged as a wider family group to contribute to the premium payments. So, with the help of a number of people to premiums were manageable. They took $25000 funeral cover as they knew from experience that would likely be the likely cost, including helping some overseas family to attend.

We understand their mother passed away last year. But, comforting was that the funeral insurance at least was there to help the family easily and quickly pay for all the funeral and related travel costs.

Insurance gets a bad rap a lot of the time, sometimes warranted, but at least here is an example of funeral insurance really doing the right thing at the right time.

 

What information is needed on a funeral insurance application?

27 July 2017 2:44am

Funeral Insurance really is one of the easiest insurance types to apply for. Funeral Plans are designed to be simple so the application process is also fast and easy.

All the insurance company require is your full name, address, phone numbers, email address, NZ citizenship or residency status, smoker status, cover level amount, name and address of your nominated beneficiary and bank details for payment. With some insurers they may also require your height and weight for premium rating purposes.

The key area of information that is not required is anything to do with your health. Funeral cover acceptance is not subject to your health so this removes a lot of questions typically associated with life insurance or health insurance type covers.

Funeral Insurance applications are typically only one page and are also commonly available to be done online in about 5 minutes.

 

Why are funeral insurance plans becoming so popular in New Zealand?

25 July 2017 6:44pm

More and more people in New Zealand are now buying funeral insurance so that when the time comes they know there is cash readily available to immediately, and without fuss, pay for the cost of their funeral.

Funerals are not cheap, but most of us do not want to go on the budget anyway. Our loved ones deserve more than that even know we hear many customers jokingly say their family can just stick them in an old box and bury them in the backyard. But the reality is we all want some sort of decent farewell, certainly our family and friends will want that.

Given the cost of a funeral it is harder and harder for people to simply put some money aside for that purpose and leave it sitting there for what could, hopefully, be years and years.

The idea of keeping any money you do have aside for your funeral is less attractive by the day. There are no doubt many other things you can use that money for. So, paying an affordable monthly or fortnightly funeral insurance premium is often a better, and easier, way to go.

Funeral Insurance is easy to obtain, in fact it is probably the most simple insurance type given there are no health questions asked. So, if affordable and easy to purchase then it is no wonder people are looking at funeral plans as a good option. Of course, depending on your age the funeral cover premiums can become more expensive especially where you are on a budget so funeral cover is not for everyone.