Losing a loved one can be a tough or even traumatic experience. Families must make important decisions in the days and weeks that follow someone’s death, whilst trying to manage their own grief at the same time. This can be a stressful situation, made even more so if they are also facing financial pressure.

Thankfully, there are ways to help ease some of these burdens whilst you’re still alive. A funeral insurance policy could be a good way to provide your family with much-needed peace of mind in the future.

What is funeral insurance?

As its name implies, funeral insurance is a type of policy designed to help cover the costs of a funeral. These policies usually offer a smaller benefit than life insurance policies. Since a funeral is a one-time expense, these policies aren’t designed to provide ongoing support for those left behind.

The payout from a funeral insurance policy can be used for things other than a service. It could also help cover final expenses or household bills. This way, family members could pay for everyday expenses if they take time off work to cope.

Why funeral insurance?

Now that you understand a bit more about funeral insurance, you may be wondering if a policy is right for you. This will depend on your personal circumstances and financial needs, but there are factors that could help you decide:

1. You’re concerned about rising funeral costs :

The cost of funerals is going up in many countries, including New Zealand. One estimate puts the price there at anywhere from $4,000 to $15,000 NZD (but it could go much higher). Though your family may be able to negotiate some prices, other costs, like council burial fees, may be unavoidable.
A funeral insurance policy could help your family pay for your service and burial. Funeral policies are generally paid out quickly, helping loved ones avoid the stress of finding funds on what is often short notice.

2. Your family may be unlikely to qualify for enough assistance :

Families sometimes qualify for financial assistance to cover funeral costs. However, these programmes are usually means-tested and may not be enough to cover all expenses. For example, the current funeral grant offered by the NZ government is only $2,058 NZD. Often, money received from these programmes must be used for funeral costs only, meaning your family cannot use it to settle final debts or other day-to-day expenses.
Funeral insurance is a more proactive way to help with funeral costs. A policy could help provide you and your family peace of mind, rather than hoping that they might qualify for a grant. A funeral insurance benefit can also be used for anything, giving your loved ones more choice over how the money is used.

3. You don’t have life insurance :

Some life insurance policies offer a small advance payment on the benefit to help pay for a funeral, so if you already have life insurance you may not need a separate funeral policy. However, older adults might find that funeral cover is a better fit for their stage of life. There may be little need for the large benefit that life insurance can provide if major debts (such as a mortgage or car payment) are paid off and your family no longer relies on you for financial support.
Life insurance might also be difficult to get as you get older, due to things like age restrictions or medical exclusions. Funeral insurance is designed with older adults in mind, making it easier to purchase a policy and providing cover amounts that may be more appropriate for their needs.

4. You don’t want to dip into a planned inheritance :

You might be fortunate enough to leave some money behind for your family after you’ve passed away. This could be a lovely gift, whether it’s a large sum or more modest one. However, given the expense of many funerals, loved ones might end up using a portion of their inheritance to help cover the cost of your service and other final expenses.
Funeral insurance could help ensure that the money you leave to your family is really all theirs. The benefit from your policy could be used to cover final expenses, giving loved ones the freedom to use the entire inheritance to help build their future.

5. You want your funeral wishes to be honoured :

Despite how difficult it can be to consider one’s own death, many people do think about their funeral. This can be general, such as preferring cremation to burial or writing down very specific plans for the service. Your family may have no issue following your wishes, but they might object if there’s a large price difference between what you’ve selected and other options.
Whilst a funeral insurance policy can’t guarantee that your family will honour your final requests, it could help. Knowing that the funds are there to cover the bill may ease concerns over costs and help family members feel more comfortable with your wishes.

Help provide your family with peace of mind :

Funeral insurance may be an important part of your financial plan. Affordable policies are available to help cover the cost of your funeral service when the time comes. That way, loved ones can focus on saying their goodbyes without worrying about where the money will come from.

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Ariana Smith is an enthusiastic fashion blogger and freelancer content writer. She loves to write and share knowledge of the latest fashion trends, fashion, and shopping tips and tricks. She is the chief editor at FollowTheFashion.