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.