How to manage a funeral insurance policy
With funerals in New Zealand costing an average of $10,000¹, not having a way to pay for yours leaves a lot to chance. Funeral insurance is specifically designed to remove the financial burden at an already difficult time.
How funeral insurance works
When you pass away, your family will receive a lump-sum payout they can use to cover any immediate expenses, such as a funeral service or outstanding bills.
Anyone can apply for funeral insurance if they’re aged 18 to 75 and there are no medical or blood tests required. You can also buy funeral insurance for your parents, however they will be the policyholder(s) and have complete control over the policy.
So long as you pay your premiums, your funeral insurance covers you for life – regardless of any changes to your health and circumstances.
Setting your cover
You can choose your level of cover from $3,000 up to $30,000. How much funeral insurance cover you choose will depend on your personal style and your family’s needs.
If you die as a result of an accident or suffer a serious injury that’s covered by the policy, you’ll receive three times the benefit you’re insured for, up to $90,000. So if you take out $10,000 worth of cover and you die in an accident, your family would receive $30,000.
The Seniors Promise
Unlike other insurance products, with NZ Seniors funeral insurance, your premiums are guaranteed to go down over time. This is the Seniors Promise *:
- Your premiums will reduce by 5% for every five years you hold your policy.
- When the time comes, your family will receive your covered amount or all of the premiums you’ve paid for your cover – whichever is greater.
- Once you turn 85 you can choose to cancel your cover to receive an Early Cash Back payment of your chosen funeral insurance benefit.
Updating your cover
It’s important to review your cover every year to make sure it’s still providing the level of protection you need. A change of circumstances could mean you need more or less cover, such as your savings going up or down, taking on or reducing debt, investments maturing or changing, and approaching retirement.
Once you’ve checked that your funeral cover is still right for your current circumstances, you can forget about it for another year and get on with life! Remember that if you change your cover, your premiums will also change.
Choosing your beneficiaries
With NZ Seniors funeral cover you have control of who receives your benefit payout. You can nominate up to five beneficiaries to split the money between. If you don’t choose anyone to receive your benefit, it will go to the policy owner. If that’s you, the benefit will be paid to your estate or to another eligible person in accordance with New Zealand legislation.
Ways to pay
Funeral insurance works like other insurance policies, where you pay a regular premium based on factors such as your age and the benefit amount. You can pay fortnightly or monthly on any day of the week that suits you, by direct debit from your bank, credit union or building society, or with Visa or Mastercard.
Managing your funeral insurance checklist
Here’s a quick recap of the important things to check off your list:
- Make a funeral plan and get accurate estimates of all expected costs.
- Make sure your funeral cover is enough for your wishes and any outstanding debts.
- Choose how and when you pay, to suit your budget.
- Review your cover every year and ensure your details are up to date.
- Keep your funeral insurance documentation with your will and make sure a family member or trusted friend knows where it is.
* If your policy is cancelled prior to age 85, no benefit amount is payable. If you change your cover, your premiums will be affected and the premium guarantee will not apply. There is no refund of premiums after the cooling off period. If you choose the Early Cash Back option, you will no longer be eligible to claim and you may receive less than the total premiums you’ve paid into your policy to date.
10 Jul 2019