Funeral Insurance
The average cost of a funeral in New Zealand is approximately $10,000. Whether you choose to have a cremation or burial, a simple service or traditional ritual, the associated costs may be more than you expect.
Pre-paid funeral plans
Funeral directors who are members of the Funeral Directors Association of New Zealand allow you to pre-pay for your funeral by putting money aside into The Funerals Trust.
Family members can request that this money is returned at any stage if they would like to engage a different funeral director. If you migrate permanently outside of New Zealand, any money in this trust may not be refunded until the person has died.
How does funeral insurance work?
Funeral insurance is a legally binding contract between you and your insurance company. In exchange for monthly or annual premiums, your insurance company gives your designated beneficiaries a lump-sum payment, also known as a death benefit, upon your passing.
Importantly, the payout from funeral insurance is not usually tied to a specific funeral provider, unlike prepaid funeral plans. This allows families to choose the type of funeral they want, rather than being locked into arrangements made years earlier. In many cases, funeral insurance also pays out relatively quickly after death, helping families manage immediate costs during a difficult time.
Overall, funeral insurance is designed to reduce the financial burden on loved ones, provide peace of mind, and ensure that funds are available when they are most needed, without requiring family members to cover funeral expenses out of pocket.
Frequently Asked Questions
When it comes to funeral insurance costs, there are four main factors that affect your premiums. These are age, amount of funeral cover required, optional add-ons, and medical history (for some providers only). For example, a 50 year-old non-smoking person seeking a $10,000 cover, will pay premiums of between $300 and $500 per year, whereas a smoker of the same age, will usually pay more and could range from $600 to $750 (or more) annually for the same plan. Read a 2023 review of the best funeral cover options in NZ.
Banks will freeze a deceased customer’s individual accounts when notified of the death which can make funeral related payments difficult. This includes transactional accounts, term deposits, credit cards and loans. If it is a joint account, the surviving person can continue to draw money from the account. Find out more about how to access bank accounts when someone dies.
The deceased person’s estate generally pays for any funeral expenses. In many cases though, there may be insufficient funds and family members will have to contribute financially. Ultimately it is the responsibility of the person who makes the funeral arrangements and signs the paperwork to pay for the funeral.
Life insurance providers usually pay out within 60 days of receiving a death claim filing. Beneficiaries must file a death claim and verify their identity before receiving payment. The pay out could be delayed or denied due to policy lapses, fraud, or certain causes of death.
Some life insurance policies include an advance funeral payout. This gets deducted from the rest of the amount you are insured for. Check the details of your life insurance to see if this is included. If you would like to set up funeral or life insurance you can search for providers in our nationwide directory.
If someone has died from an injury, ACC can pay a funeral grant of up to $7,024.80 towards funeral and memorial costs. This amount changes every year. They base the amount they can help with on the date the person passed away. You won’t pay any tax on this.
Work and Income may be able to pay a Funeral Grant of up to $2,445.37 if the estate of the person who has died can’t pay. This money can be used for costs such as professional services for preparing the body for cremation or burial (e.g. embalming) and the cost of a casket.