Is funeral insurance worth it?

The case for funeral insurance is a timing case. When someone dies, money is needed within days and the estate cannot supply it. A funeral policy pays quickly, is not tied up in probate, and removes the need for a family member to put a funeral on a credit card. That is a real problem and it is solved effectively.

The case against is arithmetic. Funeral cover is usually sold on stepped premiums, so the cost rises every year for the rest of your life. Buy at 55, live to 90, and the total paid can exceed the sum insured — meaning the policy returned less than it took. Whether that happens depends entirely on whether the policy caps premiums or stops them at an age, which is why those two provisions matter more than the monthly figure.

Both things are true at once. The product does what it says. It is also frequently sold to people who had better options available and were not told.

Funeral insurance is probably right if

• You have been declined or deferred for underwritten life cover.
• Your age is beyond the entry limits for term life cover with the insurers available to you.
• You know you would not keep a savings account intact for this purpose.
• The policy caps total premiums at the sum insured or stops them at a stated age.
• You want a small, ring-fenced amount that is not caught up in an estate.

It is probably the wrong answer if

• You have not yet applied for underwritten cover and are assuming you would be declined.
• You already hold life insurance with a bereavement advance.
• You are in your forties or early fifties and in reasonable health.
• The policy has stepped premiums, no cap and no stop age.
• You have savings you would genuinely leave alone.

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

• Whether total premiums are capped at the sum insured, which changes the value proposition entirely.
• Whether premiums stop at a stated age while cover continues.
• The initial period, and what is paid for a death from illness within it.
• What the premium will be at 75, 85 and 90, not just today.
• Whether the sum insured keeps pace with costs, and what that does to the premium.
• Whether you already hold cover that pays a funeral advance.

Every New Zealand insurer writes funeral insurance in new zealand 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 underwritten cover across the market before you accept a non-underwritten product.
• Premium cap and stop-age provisions differ between insurers and are the clearest points of comparison.
• Where existing cover is in force, an adviser can confirm whether a separate funeral policy adds anything at all.
• A good adviser will tell you when the honest answer is to keep the money in an account instead.

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.