16 2017 SEP

Funeral Insurance or Life Insurance as an option?

Funeral Insurance is typically taken for the specific purpose of paying for your funeral (although you can take a little more cover if you think you may want to clear any other debt, say a credit card or small loan). For the purpose of paying for your funeral it is common people take either $7500 or $10000 cover. But this can go to as high as $30000 with some insurers to provide for cover for extra expenses. 

Funeral cover NZ can be purchased from age 30 but many customers tend to be 60 plus. So, often they have no debt and any sons or daughters are well past the age where they are dependant financially on their parents. So. cover for funeral costs is then all that is required. In this example life insurance simply would not be required. 

Funeral Plans in NZ are guaranteed acceptance, ie no health type questions asked. So, it is easy to get funeral insurance, all you need to do is meet any age entry criteria. Premiums are also fixed for life (apart from some oddball type covers that may still exist) so again it is beneficial that you know exactly how much you will have to pay monthly at any time in the future. Some covers also have a fixed date when the premiums cease and cover continues for free.

Applying for Life Insurance has two distinct differences. Most importantly your health is very carefully assessed, so while many people will easily qualify it may not be so easy for other people depending on their current or past health. In some instances life cover may not be possible, certainly on standard terms and conditions. Life insurance premiums typically increase year by year also so while it may sometimes look a better option that funeral cover right now that may not be the case at some point down the track when you allow for life premiums possibly increasing 10-15% per year, especially once you are 65. Some life covers can have fixed premiums to age 65 or 80 you then have a big problem at those ages when life cover then becomes extremely expensive, usually to the point of un-affordability.   

If you still have debt or children who are dependant on you then life insurance is ideal. Cover amounts can be much higher (up to $1 million is often no problem, or more depending on your age). You can take life cover and funeral cover if you wish, while most people take one cover or the other there is no reason why you cannot have both if your circumstances dictate. 

Paul Woollams, Funeral Insurance Helpline , 





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