Written by Henry Smith · Reviewed by Smiths Insurance & KiwiSaver — licensed Financial Advice Provider (FSP712931) · Last updated 2026-10-20

Life cover and alternatives for low-income seniors

For a New Zealand senior on a low fixed income, life or funeral insurance is a choice, not a must. Premiums that rise with age can become hard to keep up, and a lapsed policy means the money paid is lost. The main alternatives are the Work and Income Funeral Grant (a maximum of $2,697.43, with tests), dedicated savings, a prepaid funeral plan and council help. Momentum Life's Funeral Insurance has level premiums until the 89th birthday, but it pays a fixed amount and, in the first 24 months, only for accidental death.

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Funeral cover: Only accidental death is covered for the first 2 years. Total premiums can add up to more than the cover, and it may not meet the whole cost of a funeral.

Life cover: Conditions you already have aren't covered for the first 2 years (premiums refunded instead). Suicide isn't covered for the first 2 years, and a few conditions can be excluded permanently.

Insurer: Momentum Life Limited. Financial strength rating B (Fair) from AM Best, affirmed 11 February 2026; B ratings sit in AM Best's 'vulnerable' range. The rating scale is available for inspection at every Momentum Life office in New Zealand. What this means

Already have cover? Keep it. New cover won't pay for a condition you already have in its first 2 years.

Opens Momentum Life's online application; its guidance only covers eligibility. QuoteHub is a Momentum Life partner. Smiths Insurance & KiwiSaver may receive a commission if you buy. General information, not advice.

In short

No one has to buy cover. If you have no one who relies on you and a plan for the funeral, you may not need it.
Total premiums can exceed the benefit, and the benefit may not cover the whole funeral.
A policy that lapses pays no benefit, and cancelling outside the first 30 days returns no premiums.
The Funeral Grant has income and asset tests, and insurance proceeds and prepaid funeral money can reduce it or stop it.
Savings, a prepaid plan and council help are real alternatives, and a licensed adviser can look at them with you.

Is insurance a sensible cost on a fixed income?

It can be, for some people, and it is a poor use of money for others. Three questions help.

Does anyone rely on you? Cover with a large sum, such as life insurance, matters most where a partner or dependant would lose your income or care. Funeral cover only contributes towards the funeral.
Could the funeral be paid some other way? Savings, the estate, family, the Funeral Grant or a prepaid plan may do it. The FDANZ 2026 report gives an average of $11,700 for a full cremation funeral for 50 guests, $14,300 with burial, and $4,700 for an unattended cremation with no service (FDANZ).
Can you keep paying until the end? The financial risk of insurance on a low income is the lapse.

The lapse risk

Momentum can cancel either Funeral Insurance or Quick Life if premiums go unpaid, and a cancelled policy pays no benefit. Under Momentum's Funeral Insurance wording (Momentum Life: Funeral Insurance Policy Wording):

If a premium stays unpaid for more than a month, Momentum can cancel the policy.
Reinstatement is by application, and it is not guaranteed.
You can cancel on 30 days' notice, but outside the first 30 days there is no refund of premiums.
A new 24-month window applies to any increase in the benefit and to any person added.

Quick Life's wording says paying a premium after cancellation does not automatically reinstate the policy, and reinstatement restarts the 2-year exclusion (Momentum Life: Quick Life Policy Wording). Quick Life premiums are stepped: they generally rise every year until 75 and are then fixed. Funeral Insurance premiums are level until the 89th birthday, but Momentum can change them for everyone on the same offer on 30 days' written notice, for a change in tax or other law or claims experience.

Premiums against the benefit: a worked example

Momentum publishes no funeral premium, and this table is not a quote. The yearly figures are round, invented numbers, not anyone's price, so you can see how the total paid grows, and you should replace them with the figure you are quoted.

Example yearly cost	Paid for 10 years	Paid for 15 years	Paid for 20 years
$240 a year	$2,400	$3,600	$4,800
$480 a year	$4,800	$7,200	$9,600
$720 a year	$7,200	$10,800	$14,400

The table assumes no premium change and no interest. Set the totals beside the benefit you would receive ($3,000 to $30,000) and beside the Funeral Grant maximum of $2,697.43. A person who starts at 70 and pays a level premium to the 89th birthday would pay for 19 years if they live that long. The benefit is a fixed sum and does not grow, so the longer you pay, the more the policy costs against what it pays. The wording itself says total premiums could exceed the benefit and that the benefit may not cover the cost of a funeral. IFSO said in December 2025 that insurers should warn customers of that risk (IFSO).

If you die in the first 24 months of Funeral Insurance from anything other than an accident, no benefit is paid, and the premiums for that person are refunded. To weigh this for your own numbers, try the funeral insurance break-even calculator, and read is funeral insurance worth it.

Work and Income Funeral Grant

The Funeral Grant is paid for the funeral of your partner, your parent or guardian, your child under 18, or a single person over 18 whose funeral you arrange. The maximum is $2,697.43 (Work and Income page updated 24 June 2026). Key points from Work and Income:

An income test applies only where the person who died was your partner or child.
Assets count. If the person who died is not your partner or child, their assets are deducted from the funeral expenses; if they are, the first $2,351.46 of your assets is ignored and theirs count. The grant is the lesser of the maximum or the unmet balance.
Cash assets include life insurance proceeds and any prepaid funeral account, and "prepaid funeral cover" can stop you getting the grant.
The grant covers reasonable expenses such as director fees, casket, notices and burial or cremation fees; there is no time limit to apply.

So a funeral policy and the grant interact. A benefit paid to the family can reduce the grant, and a prepaid plan can remove it. The grant is not a promise that it will cover the rest. Our Funeral Grant guide sets out the tests, and funeral insurance versus the Work and Income grant compares the two.

Savings, prepaid plans and other help

Savings. Money set aside in an account you control stays flexible and goes to the estate if unspent. See funeral insurance versus saving.
A prepaid plan. Now For Them says it is "not a savings or investment product" and pays no interest. It charges "no fees" (it will say if that changes), and the first $10,000 is excluded from residential care asset testing under current Ministry of Social Development policy (FDANZ). Public Trust also offers a Prepaid Funeral Trust with a set-up fee and an end fee, and says the first $10,000 is exempt from the Residential Care Subsidy asset test (Public Trust). Consumer NZ notes that money in a trust may not be withdrawable unless you are in significant financial hardship (Consumer NZ).
Council help. A council running a cemetery or crematorium may bury or cremate a poor person free if the deceased left too little and relatives cannot pay (Burial and Cremation Act 1964 s 49). FDANZ says some councils still ask funeral homes to apply to Work and Income first (FDANZ). Read what to do if you can't afford a funeral.
Family and community. Iwi, church and community funds and crowdfunding exist; the guides above describe them.

A prepaid plan can still affect the Funeral Grant, so check both before you commit.

What Momentum's Funeral Insurance does and does not do

Momentum Life's Funeral Insurance accepts ages 40 to 75 with no health questions, for a benefit of $3,000 to $30,000 (triple for accidental death). It pays a fixed benefit towards costs, not the funeral itself. Premiums are level until the 89th birthday and then stop, with cover continuing for life. In the first 24 months it pays only for accidental death within 90 days of the accident. Its A.M. Best rating is B (Fair); see Momentum's financial strength page. The product page is Momentum Funeral Insurance. Our funeral insurance hub explains the alternatives.

Speaking to a licensed adviser

If you are weighing cover against a fixed income, a licensed adviser can look at your whole position, including any residential care planning, and say when not buying is the right answer. Advice is provided by Craig Smith Business Services Limited, trading as Smiths Insurance & KiwiSaver, a licensed Financial Advice Provider (FSP712931). QuoteHub is a Momentum Life partner, and Smiths Insurance & KiwiSaver may receive a commission on Momentum products; see how we are paid. The buttons on this page lead to Momentum's own application. You are under no pressure to use them.

Frequently asked questions

Do I need life insurance on NZ Super?

Only if someone relies on you or you cannot cover final costs another way. Many people on a fixed income reasonably decide not to buy.

What happens if I stop paying?

Momentum can cancel after a month of unpaid premium. Cancelling outside the first 30 days returns no premiums, and reinstatement is not guaranteed.

Can I claim the Funeral Grant if I have funeral insurance?

Possibly not in full. Cash assets include life insurance proceeds, and prepaid funeral cover can stop you getting the grant. Ask Work and Income.

References

Momentum Life: Funeral Insurance Policy Wording (17 August 2023), retrieved 17 October 2026
Momentum Life: Quick Life Insurance Policy Wording (November 2025), retrieved 17 October 2026
Momentum Life: Financial strength, retrieved 20 October 2026
Work and Income: Funeral Grant, retrieved 20 October 2026
Work and Income: Funeral Grant, definition of assets (Map), retrieved 20 October 2026
FDANZ: 2026 New Zealand Funeral Industry Trends Report (PDF), retrieved 20 October 2026
FDANZ: Now For Them, retrieved 20 October 2026
Public Trust: Prepaid Funeral Trust, retrieved 20 October 2026
Consumer NZ: 5 ways to pay for your funeral, retrieved 17 October 2026
IFSO: Funeral insurance, what consumers need to know, retrieved 17 October 2026
Burial and Cremation Act 1964, retrieved 20 October 2026