Funeral insurance basics

Funeral insurance is a financial cover for your family to pay for funeral costs or other end-of-life expenses after you pass away. It can also cover you for major setbacks like a terminal illness or accidental serious injury. That means you’ll not only be helping your family during a tough time, but you’ll also have a plan B in case your own life takes a wrong turn. Not a bad deal!

Citizens Advice Bureau says that funeral insurance is one option to help pay for funeral costs, using the money from a claim.1

Unlike most insurance products, funeral insurance covers an inevitable outcome. Some of us can go a lifetime without using our car or health insurance but we’ll all need a funeral eventually. While most of us prefer not to think about it, planning your funeral and how it will be paid for ahead of time could save your family a lot of hassle and financial stress, as organising things on short notice can be tricky. Besides, planning your own farewell gives you the chance to make it all about you — whether you want a lavish festival with a rugby theme, or just something simple that reflects your life.

How does funeral insurance work?

  1. You apply forfuneral insurance

    1
    • Choose the cover amount that works for you
    • Get a quote
  2. Insurancecompany

    2
    • Assesses application and approves cover
    • Issues funeral insurance policy
    • Covers the life insured under the terms of the policy
  3. Insuranceevent

    3
    • Claim is submitted by the claimant
    • Claim is assessed by insurer
    • Lump-sum payout made to the beneficiary or estate (to you for a terminal illness or accidental serious injury claim if applicable) within 1-2 business days of receiving required paperwork  

In exchange for a fortnightly, monthly, or annual premium, funeral insurance pays out a set amount of money (known as the ‘cover amount’ or ‘benefit amount’) when you pass away or face another mishap covered by your policy. The benefit is the amount you choose when you apply for cover (generally capped at $30,000) which is usually paid to you within 1 business day after making a claim.

Your estate or your nominated beneficiaries will get the full benefit amount for an eligible claim, regardless of how long you’ve held the policy, as long as the policy is active when the insured event occurs.

The application process is usually seamless — you may be asked a few questions about your health and lifestyle, but many providers offer guaranteed acceptance if you’re a New Zealand resident and within the eligible age bracket. Winning!  

Your level of cover

In New Zealand, most providers offer cover up to $30,000. The minimum amount is usually around $3,000. The higher your cover amount, the higher your premiums will be. While funerals can be expensive, it all comes down to how much you’re willing to spend on your closing act. You might want to read up on some of the expected costs of a funeral or tangi to help you figure out a suitable cover amount.

It's also worth considering any other immediate costs your family could face when you’re gone. If you have any personal debts or are worried about legal fees poking into your estate and will, you may want to consider this when calculating your level of cover. 

Premiums vs. payout – understanding what you’re paying for

Premiums can be stepped, meaning they increase each year with age, or they can be level premiums, meaning they don’t increase automatically each year. Consider which type of premium structure suits you. It’s possible with a funeral insurance policy to end up paying for more than you actually use, as your total premiums paid over the life of your policy could exceed your final benefit amount. That’s why it’s really important to balance your level of cover with the premiums you could pay over time.

Read more about how funeral insurance works. 

It’s important to remember that funeral insurance isn’t a savings plan. You’re not only paying for your expected benefit amount, but also the comfort of knowing that the money will be available right when it’s needed. Plus, some providers offer extra benefits to help you fix even more of life’s dings, such as cover for an accidental serious injury or diagnosis of a terminal illness.

If you’re not sure about how much cover you could need, you should chat to a financial adviser as well as your family. And don’t forget to ask them about the final payout from funeral insurance as this is usually tax-free.

Get up to $30,000 to plan life's closing act

What does funeral insurance cover?

Generally, funeral insurance covers you for death, but you may also be covered for certain illnesses or injuries. Some policies also have added cover for your children or spouse.

A funeral or tangi can be expensive. You can expect to pay around $10,000 for a standard service and up to $15,000 or more for something a little fancier.2 Funeral insurance is designed to help your family plan the perfect send-off without worrying about how to pay for the costs getting in the way.

Breakdown of funeral costs

To see how funeral insurance could help, it’s good to be aware of the typical costs you might expect when planning a loved one’s curtain call. Keep in mind that these figures are estimates only and will likely vary depending on the service provider.

Item Estimated cost 3 4 5
Burial plot $2,740 (Christchurch) – $6,000+ (Auckland)
Cremation and internment $695
Coffin/casket $2,500
Headstone $1,000
Embalming $700
Digging fees $1,108 – $1,860
Death certificate $33


You’ll also need to factor in other costs like:

  • flowers
  • catering
  • venue hire
  • transporting the deceased
  • estate and legal fees.

Read more about the cost of a funeral.

Life insurance compared to funeral insurance

Life insurance is a type of insurance policy that also covers you for death, but keep in mind that there are a few differences between life insurance and funeral insurance.

Life insurance is an underwritten product, typically used to protect your family’s long-term financial future if you passed away unexpectedly. You can get a payout of up to $2 million depending on your age and the provider you choose. Some policies also have an advanced funeral payout to help with sudden funeral costs while your family’s claim is being assessed.  

Slide to compare >>

Life insurance Funeral insurance
Benefit amount Generally from $100,000 up to $2 million (depending on your age) Generally up to $30,000 (may not be capped by age)
Claim processing time May take 5 to 10 business days or longer as more documentation is required to assess the claim. Often between 1-2 business days from receiving all documentation needed (depending on provider).
Approval criteria Underwritten product so health and lifestyle questions and/or medical screening may be required. Many providers offer guaranteed acceptance for New Zealand residents aged 18–79.
What the payout may typically be used for
  • Immediate funeral costs
  • Paying off debts or making ongoing payments e.g. mortgage, personal loans, credit cards
  • Children’s education fees
  • Lifestyle adjustments after a death or medical impairment
  • Supplementing lost income if the main provider passes away
  • Immediate funeral costs
  • Estate/legal fees
  • Paying off small personal debts the deceased may have had


In the end, it comes down to your personal goals and situation as well as eligibility for which product you choose. Have a look at OneChoice Funeral Insurance and OneChoice Life Insurance to see whether they might be worth considering.

Make the call

If you’re keen for a chat, call us on 0800 640 004 from 8am to 8pm Monday to Friday. If you’re too busy enjoying life, we can call you instead, or why not request a quote now?