How inflation affects a fixed funeral insurance benefit

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.

Funeral insurance does not keep up with inflation by itself. Momentum Life's Funeral Insurance pays the fixed benefit you chose, from $3,000 to $30,000, and the policy wording has no clause that raises that amount over time. If funeral costs rise, the same dollars buy less. Total premiums can also exceed the benefit, and the benefit may not cover the whole funeral.

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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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What a fixed benefit means

A fixed benefit is a dollar amount set when the policy starts and written on the Policy Schedule. Momentum's wording says the benefit is "the amount shown in the Policy Schedule", and it changes only if you ask to increase it (Momentum Life: Funeral Insurance Policy Wording, 17 August 2023). If you choose $10,000 today and die in twenty years, the amount paid is $10,000 (or $30,000 if the death is an accident within 90 days, since accidental death pays three times the benefit). Two things move in opposite directions. The premium is level until the 89th birthday, so what you pay does not rise with age, although it can change for everyone on the same offer if tax law changes or claims experience is significantly different from expected, on 30 days' written notice. The thing the premium buys, a funeral's worth of money, is what inflation erodes.

What has happened to funeral costs

We found no published national index of total funeral prices. The nearest sources are these.

FDANZ's 2026 report prices a full funeral for 50 guests at an average of $11,700 for a cremation (range $10,000 to $13,900) and $14,300 for a burial (range $12,800 to $17,000). An unattended cremation averages $4,700 (FDANZ, 2026 New Zealand Funeral Industry Trends Report). That report is one year's survey; it does not give a year-on-year trend for the whole funeral.
It does give council burial totals (plot, interment and compulsory maintenance) for 1 July 2023 and 1 July 2025 for 15 councils. We worked out the simple average of the 15: about $4,429 in 2023 and $4,865 in 2025, a rise of about 10% over two years (our arithmetic from FDANZ's table, not an FDANZ figure).

Council (burial total)	1 July 2023	1 July 2025	Change
Auckland Council cemeteries (Manukau, Waikumete, North Shore)	$6,112	$6,570	7%
Tauranga	$4,954	$5,614	13%
Dunedin	$4,399	$5,877	34%
Christchurch	$3,051	$3,356	10%
Palmerston North	$3,317	$3,656	10%
New Plymouth	$7,207	$7,207	0%

FDANZ says council increases "have, in some centres been well above the rate of inflation", and that some councils say they are not yet at full cost recovery. Two years is a short run, council fees are only part of a funeral, and the 15-council sample is not the whole country. It shows that one cost within a funeral rose faster than general inflation in some places, not that every part of a funeral will.

What a fixed benefit is worth later: an illustration

The table below is arithmetic, not a forecast. We have no source for the rate at which New Zealand funeral costs will rise, so we use three round annual rates of 2%, 3% and 4% as assumptions. "Worth in today's money" is the benefit divided by (1 + rate) multiplied by itself once for each year. The last column shows what a funeral that costs $11,700 today (FDANZ's cremation scenario) would cost at the same rate. Figures are rounded to the nearest $100.

Assumed yearly rise	Years	$10,000 benefit is worth	$15,000 benefit is worth	A funeral costing $11,700 today would cost
2%	10	$8,200	$12,300	$14,300
2%	15	$7,400	$11,100	$15,700
2%	20	$6,700	$10,100	$17,400
3%	10	$7,400	$11,200	$15,700
3%	15	$6,400	$9,600	$18,200
3%	20	$5,500	$8,300	$21,100
4%	10	$6,800	$10,100	$17,300
4%	15	$5,600	$8,300	$21,100
4%	20	$4,600	$6,800	$25,600

Read it as a range of what could happen, not a prediction. At 3% a year, a $10,000 benefit would pay for about 55% of what it buys today after twenty years. The same arithmetic applies to a level premium: it also falls in real terms as time passes, alongside the benefit.

Does any NZ funeral plan increase automatically?

Momentum's Funeral Insurance does not. You can ask Momentum to increase the benefit, but an increase is priced at Momentum's premium rates at that time, starts a new 24-month accident-only window for the increase, and cannot take the total above $30,000 for one person across all Momentum funeral policies (Momentum may change that maximum and says it will not notify you). See how to increase funeral insurance cover.

Among the other products we compared on our funeral insurance comparison page, we found no annual indexation of the funeral benefit. NZ Seniors adds a one-off 25% Bonus Cover at 85 (NZ Seniors: Funeral insurance), which is a step, not an inflation link. Momentum's separate Quick Life life cover does index: the benefit rises 3% each policy anniversary until 75 or a $500,000 cap per person, unless you opt out. That is a fixed 3%, not the consumers price index, and it is life cover of $50,000 to $300,000 with a two-year exclusion for pre-existing conditions and suicide. See the Quick Life page.

What if costs exceed the benefit?

The gap falls on whoever arranges the funeral, or on the estate. Options to know about:

Work and Income Funeral Grant. Up to $2,697.43 as at 1 April 2026, with income tests for a partner or child, an assets test, and a rule that prepaid funeral cover can stop you getting it (Work and Income: Funeral Grant). It is not automatic, and we do not assume the grant covers the rest.
ACC, if the death was from a covered injury: up to $8,236.40 towards funeral and memorial costs, with the amount set by the date of death (ACC: Financial support after death).
Locking in one cost. FDANZ notes that pre-purchasing a burial or ash plot "avoids future council price-rises" (FDANZ: Financial matters).

Ways to protect against rising costs

None is free of trade-offs.

Review the amount. Compare your benefit with the current FDANZ averages and use our funeral cost calculator. Increasing later is priced at Momentum's rates at that time and restarts the early window for the increase, so a larger initial benefit may suit someone who can afford it.
Choose a different tool. Savings, a prepaid plan or higher fully underwritten life cover do different jobs; see funeral insurance versus saving for a funeral and versus a prepaid funeral.
Treat the benefit as part of the answer. Many families combine a policy, savings and a grant.

Who it suits and who it does not

A fixed benefit suits someone who wants a known sum set aside without health questions and accepts that its buying power will drift. It suits a younger applicant less well than an older one, since twenty years of drift is larger than five. It does not suit someone who expects to need a precise funeral price covered in full, or who can save the money themselves.

Where to get advice

Momentum Life Limited is rated B (Fair) by A.M. Best, a rating Momentum's own table groups in its "Vulnerable" range; read its financial strength page. The first 24 months pay only for accidental death; any other death in that time pays no benefit and all premiums are refunded. The buttons on this page open Momentum Life's online application. 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. General information, not advice. Financial 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 see what a funeral costs and the Momentum Life Funeral Cover page.