Funeral insurance: what does it cover, and how much do you need?

It’s strange to think about your own funeral – so many people just don’t. Which means the task of planning and paying for the service can often fall to loved ones, in a time of great sadness and upheaval. By putting a plan in place, you can help save your loved one’s the extra pressure.

Knowing how much a funeral could actually cost is often an unknown for many, but it’s been found that the average cost for a funeral in New Zealand is around $10,000.

Here are some of the costs that people consider within that:

• Planning costs include things like registering a death and hiring a celebrant/minister
• Funeral home costs include things like fees, embalming, hiring a hearse and buying a coffin or urn
• Burial or Cremation costs include things like buying a headstone, purchasing a burial plot and cremation fees
• Reception costs include things like venue hire, catering and flowers

There can also be lots of little unexpected costs that start to add up such as photo printing, funeral programmes, death notices and musician fees. Even if you’re only after a simple service, the bill could be steeper than you realise.

Getting a gauge on the cost of your funeral

Two key factors that influence the cost of a funeral (and the level of funeral cover you may need) are:

• Whether you’d prefer to be buried or cremated
• Whether you’d prefer a small, medium, or large service

You might also want to think about a fund for travel costs associated with your funeral – for example, the price of sending your ashes overseas, or helping family members to attend the service that live abroad. This can be anything from under $100 to several thousand depending on your needs.

In some circumstances you may be eligible for financial assistance from government agencies, but the reality is that most people or their families, will have to make their own funding arrangements.

AA Life Funeral Cover – what does it cover?

With AA Life Funeral Cover, you can get cover for up to $30,000, with guaranteed acceptance for anyone aged 50-79, and no medical questions when you apply.

The policy includes an additional accidental death benefit, and if you’re diagnosed with a terminal illness for the first time (after the first two years, and it is expected to result in death within 12 months) we can give you an early pay-out too, taking a little stress away at the most difficult time of your life and allowing you to focus on your family.

It’s not nice to think about your own death, and most of us try to avoid it at all costs. But by putting a plan in place, you can help ease the burden on your loved ones when it comes to paying for your funeral and associated costs.

A couple of important things to know

• If you die within the first two years of buying a policy, you will only receive the sum insured if death is the result of an accident.  You will receive a refund of the premiums paid if you die of natural causes within the first two years.

• Premiums are payable until your 90^th birthday so it is possible to pay more in premiums than your total cover amount. After your 90^th birthday, cover remains in place, but you no longer pay premiums.