Funeral Insurance: The rising cost of dying in New Zealand

Funerals Insurance are a topic many people prefer to not think about. The thought of dying can be distressing, leading individuals to avoid making plans for their own death. But with funeral costs soaring, a little preparation could help reduce the costs for those left behind.

The Funeral Directors Association of New Zealand (FDANZ) advises that the average cost of a funeral1 is between $6500 and $7000. However, services can easily reach up to $10,000 or more. This means there is a growing gap between the cost of a basic funeral and Work and Income’s $2000 funeral grant.

Councils and Cost Confusion

Growing funeral costs can largely be attributed to rising cemetery fees charged by councils. Throughout the Auckland region, burial plots increased by an average of 22 per cent between 2014 and 2015, reaching an average cost of $5,500.2 This effectively prices many people out of burial, forcing them to choose the cheaper option of cremation.

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At the same time, it can be difficult to find accurate information about funeral costs. Many funeral companies do not provide prices for their services online, or only provide estimates before the actual event. Families may find it virtually impossible to compare prices in the rush to make arrangements.

In 2015, the Law Commission recommended protection laws to better protect consumers.3 These include requiring funeral directors to provide itemised prices in quotes or invoices and listing prices on promotional materials. However, legislation backing the commission’s findings is yet to be introduced.

NZ residents without a plan

Given the difficulty obtaining clear pricing and the discomfort many feel surrounding death, few New Zealanders have made arrangements for their own funerals. According to FDANZ, only 5 per cent of Kiwis plan for their funerals, compared to 15 per cent in Australia.

There are several ways people can pay for their own funeral arrangements, including funeral bonds and pre-paid plans. However, these options can typically require customers to lock in some details at purchase, such as choosing a funeral director or place of burial.

Funeral insurance is a flexible way to help ease the financial burden of paying for a funeral. The insurance benefit is paid to chosen beneficiaries, without needing the insured to make decisions about their funeral services beforehand. Many policies do not stipulate what the benefit must be used for, meaning families can use additional funds to settle final debts or even pay for household expenses whilst on bereavement leave.

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