Can a funeral insurance benefit pay for a cremation?

Written by Henry Smith · Reviewed by Smiths Insurance & KiwiSaver, licensed Financial Advice Provider (FSP712931) · Updated 2026-10-20 · Reviewed quarterly, when the underlying data is restated.

Financial advice is provided by Craig Smith Business Services Limited, trading as Smiths Insurance & KiwiSaver, a licensed Financial Advice Provider (FSP712931). QuoteHub is a trading name.

Yes. A funeral insurance benefit is paid as cash, and the policy we checked does not say the money must go to a burial. Momentum Life pays $3,000 to $30,000 to the policy owner or beneficiary, so the family can put it towards a cremation. It may not cover the whole bill, and nothing is paid for illness in the first 24 months.

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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

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The short version

Funeral insurance is a cash policy. Momentum Life Limited's Funeral Insurance pays a benefit you choose between $3,000 and $30,000 when the person insured dies and the policy is in force. The policy wording defines the benefit as "the amount shown in the Policy Schedule that we will pay when a Life Insured dies". It does not mention burial or cremation as conditions, and it says nothing about how the money must be spent. A cremation, a burial, a memorial service and a wake are all things the money can go towards. The limits sit elsewhere: the amount you chose, a 24-month window in which only an accident pays, and who receives the payment. The questions below take those one at a time. For the wider cost picture see cremation insurance in New Zealand.

Eight quick questions

Does funeral insurance pay for cremation costs in NZ?

It pays a cash benefit that can be used for them. It does not pay a crematorium or a funeral director directly. Momentum's wording says it cannot pay a benefit directly to a company, charity or other organisation, so the money goes to a person (Momentum Life: Funeral Insurance Policy Wording). Who receives it is covered in does funeral insurance pay the funeral director.

Is there a rule that the money must be spent on a burial?

Not in the Momentum wording we read. People also search for "burial insurance", and we treat it as the same kind of cash policy as funeral insurance. Our page on burial insurance in NZ covers the name.

Does Momentum Life restrict how the benefit is used?

The wording sets conditions for paying, not for spending. Payment is made to the Policy Owner, or after the owner's death to the beneficiaries they named, or if none are named to the owner or the executor of the owner's estate. Beneficiaries must be natural persons.

What does a cremation cost?

It depends on whether there is a service. FDANZ's 2026 report puts a no-service cremation at an average of $4,700 and a full cremation funeral with 50 guests at an average of $11,700, range $10,000 to $13,900 (FDANZ, 2026 Industry Trends Report). Costs vary by region and director. We give the breakdown in our direct cremation guide.

Does the 24-month wait apply to a cremation?

Yes, because it applies to the policy, not to what the money buys. In the first 24 months Momentum pays only if death is the direct result of an accident and happens within 90 days of it. For any other cause in that window nothing is paid and all premiums for that person are refunded. After 24 months the benefit is paid for death from any cause. See funeral insurance waiting periods.

What if the benefit is less than the cremation cost?

The family pays the difference from savings, the estate, a grant or other sources. The wording says plainly that the benefit "may not cover the cost of a Life Insured's funeral". A $3,000 benefit would fall short of both FDANZ averages above. The Work and Income Funeral Grant of up to $2,697.43 may help, though prepaid funeral cover can affect eligibility (Work and Income: Funeral Grant).

Do the cremation forms change the insurance claim?

They are separate. A cremation needs a cause-of-death certificate or coroner's order, a Form A signed by the executor or a near relative, a doctor's or nurse practitioner's form and the medical referee's permission (Health NZ: Cremation). Ask your funeral director which of these they arrange. The insurance claim is made to Momentum on its own form with a death certificate or similar proof, and the claims line is 0800 108 108 (Momentum Life: Claims).

How do I choose an amount for a cremation?

Start from the cost you expect, not the maximum. If you plan a no-service cremation, FDANZ's $4,700 average is one starting point, with a margin for extras. If you want a service, the $11,700 average is closer. Then weigh the cost of holding the cover. Premiums are fixed each year until the 89th birthday, and total premiums can end up larger than the benefit. A larger benefit costs more each month for every year you pay.

Who this suits, and who it does not

Funeral insurance can suit someone aged 40 to 75 who wants a cash sum for a cremation without answering health questions, and who accepts the 24-month wait. It does not suit someone who is already unwell and may die within two years, because illness pays nothing in that window. It also does not suit someone who has the money saved, or anyone over 75, since Momentum takes no new applicants over that age. Compare it with saving and prepaying in is funeral insurance worth it.

Getting advice

The buttons on this page open Momentum Life's online application for Funeral Insurance. Momentum Life holds an A.M. Best rating of B (Fair), in the range Momentum calls "Vulnerable"; read its financial strength page. QuoteHub is a Momentum Life partner and Smiths Insurance & KiwiSaver may receive a commission if you buy a Momentum policy; see how we are paid. Advice is provided by Craig Smith Business Services Limited, trading as Smiths Insurance & KiwiSaver, a licensed Financial Advice Provider (FSP712931). Back to the funeral insurance hub, or read how funeral insurance works.