How to compare funeral insurance across providers

Funeral insurance pays a small lump sum on death to meet immediate costs — the funeral director, the plot or cremation, and the bills that arrive before an estate settles. It is sold heavily to older New Zealanders on two features: no health questions, and a low weekly price.

Both features are real, and for some people the product is genuinely appropriate. Someone in poor health who cannot be medically underwritten, with no savings and a family who would struggle with a five-figure bill, is exactly who this product exists for.

The problem is that the same product is also sold to people who could easily obtain ordinary underwritten life cover, at several times the sum insured for the same premium. Nobody in the sales process asks whether that is you, because it is not their job to. So you have to ask.

Run these four checks on any funeral product, from any provider, before you compare brands against each other.

1. 1The stand-down. Ask exactly what is paid if you die from illness in year one and year two. The common answer is a refund of premiums, sometimes with interest, and full cover only afterwards. Accidental death is usually covered from day one. Get the specific wording.
2. 2Cumulative premium against sum insured. Ask for a projection of total premiums paid to ages 80, 85 and 90 alongside the sum insured. On age-rated cover with a small benefit, the lines can cross. Some products cap premiums at a certain age or stop them while cover continues; many do not.
3. 3Entry and expiry ages. Ask the maximum age at which you can take the policy out and whether cover reduces or ends at a maximum age. A policy that ends at 90 while you are still paying for it is a poor outcome.
4. 4Whether you could be underwritten instead. This is the check that changes the most outcomes. Ask an adviser to run one fully underwritten quote alongside. If it comes back at standard rates, you have found several times more cover for the same money.

The alternative nobody sells

A funeral in New Zealand costs a meaningful but not catastrophic amount, and the largest components are known in advance. For a household with savings and a reasonable time horizon, putting the equivalent of the premium into a separate account produces a sum you own, that earns something, and that is available for any purpose — including a funeral.

That is not the right answer for everyone. If the discipline is not there, or if the risk of dying in the next few years is real, insurance transfers a risk that saving does not. But a good adviser will put the option on the table rather than pretending it does not exist.

These are the details that decide whether the cover does what you expected. Read them before you compare on price.

• The exact stand-down wording, including whether it applies to all illness or only to pre-existing conditions.
• Whether premiums are stepped and age-rated, and what the weekly figure becomes at 75 and 85.
• Whether the sum insured is fixed or indexed, since a fixed sum erodes against funeral cost inflation.
• Whether cover ends at a maximum age, and whether premiums stop at any point.
• What happens if you miss payments — how long the grace period is and whether the policy can be reinstated.
• Whether an accidental death benefit is the only cover in force during the stand-down.

Every New Zealand insurer writes funeral cover to its own wording, and the words are where the money is. Two policies that look identical on price can pay very differently when it matters. Closing that gap is the entire job of an adviser.

• An adviser can test whether you would be accepted on full underwriting, which usually buys far more cover per dollar.
• Where a health history is genuinely difficult, an adviser knows which insurers are likeliest to offer terms rather than decline.
• An adviser will model cumulative premiums against the sum insured, which sales material rarely does.
• An adviser can compare a policy against simply setting the money aside, and will say when saving is the better answer.
• For an estate, an adviser can advise on ownership so the money is available quickly rather than waiting on probate.

There are three ways to buy life cover in New Zealand, and they are not equivalent. You can buy direct from one insurer, which means you see one product range and one underwriting appetite. You can buy through your bank, which usually means a single insurer’s product sold under the bank’s brand, often with narrower definitions. Or you can go through an adviser, who quotes several insurers at once and is required to put your interests first.

The premium you pay is the same either way. Insurers build adviser commission into their pricing whether or not an adviser is involved, so going direct does not get you a discount — it just removes the person whose job is to argue your corner at application and at claim time.

• An adviser can see which insurer is currently taking your health history on standard terms, and which one will load or exclude it.
• An adviser can structure cover across two insurers if that produces a better outcome than putting everything with one.
• An adviser handles the underwriting back-and-forth, and is the person who chases the claim when a family is least able to.
• An adviser has to document why the recommendation suits you, which is a written record you can hold them to.

We are a referral service, not an insurer. We do not quote premiums and we do not sell policies. What we do is put you in front of one licensed New Zealand adviser who can compare the market properly.

1. 1

   You tell us what you are looking at

   The form takes about a minute. Nobody asks for your medical history on a web form — that conversation happens with the adviser, properly, and only once you have decided to proceed.

2. 2

   An adviser calls you

   A licensed New Zealand adviser talks through your situation: who depends on you, what you owe, what you already have in place, and what you are actually worried about.

3. 3

   They compare the market

   The adviser quotes across the major insurers, checks which of them will take your health history on the best terms, and puts the options side by side in writing.

4. 4

   You decide, in your own time

   There is no obligation and no cost to you. If the answer is that you already have enough cover, a good adviser will tell you that.