Common funeral insurance myths checked

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.

Several funeral insurance claims in New Zealand are only partly true. "Acceptance is guaranteed" is true for eligible applicants, but in Momentum Life's Funeral Insurance the first 24 months pay only for accidental death, and any other death returns the premiums instead. Premiums are level to the 89th birthday, not to the end of life, and total premiums can exceed the benefit. This page checks each myth against a named clause and says where other products differ.

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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.

How to read this page

The checks use the Momentum Life Funeral Insurance Policy Wording (issue date 17 August 2023) unless another insurer is named (Momentum Life: Funeral Insurance Policy Wording). Other insurers are read from their own pages, retrieved 20 October 2026. A fact check is not advice on whether a policy is worth buying; that is a separate question, covered in is funeral insurance worth it.

Myth	Verdict for Momentum's Funeral Insurance
Guaranteed acceptance means the benefit is always paid	Misleading: accident-only for 24 months
Die in the first two years and the premiums are lost	False: all premiums for that person are refunded
The premium rises as you get older	Mostly false: level until the 89th birthday, but changeable
You pay premiums for life	False: they end at 89 and cover continues
The benefit pays for the funeral	Not necessarily: a fixed $3,000 to $30,000
You always get back more than you pay	False: totals can exceed the benefit
The money goes straight to the funeral director	False: it goes to a person
No health questions means no paperwork	Partly true: not to get cover, but claims need proof
It is the same as a prepaid funeral plan	False: different products
It replaces the Funeral Grant	False: separate, with its own tests

1. "Guaranteed acceptance means the benefit is always paid"

No. Acceptance is guaranteed for New Zealanders aged 40 to 75, with no medicals, health questions or paperwork to get cover. The benefit is another matter. "In the first 24 months, we will only pay a Funeral Insurance Benefit if a Life Insured dies as a direct result of an Accident and the death occurs within 90 days of that Accident." After 24 months it pays for death from any cause. See the waiting periods page.

2. "If I die in the first two years, the premiums are wasted"

Not with Momentum. Any death in the first 24 months from a cause other than an accident returns all premiums paid for that life since the cover start date. Other insurers differ: NZ Seniors and OneChoice run a 12-month accident-only window, and OneChoice states "You can't get a refund on premiums after the cooling-off period" (OneChoice: Funeral insurance). Check this clause in any product you consider. The refund page has more.

3. "The premium goes up as you get older"

For Momentum's Funeral Insurance, the premium rate stays the same each year until the insured person's 89th birthday. That is not the same as "fixed for life". The rate can change, for everyone on the same offer, for a change in tax or other law, or if claims experience is significantly different from expected, with at least 30 days' written notice and effect from the next policy anniversary. Increasing the benefit or adding a person is priced at current rates. Some life products do step up each year; Momentum's Quick Life is one, and it is a different product. See do funeral insurance premiums rise.

4. "You pay premiums until you die"

Not with Momentum. Payments end at the 89th birthday and cover continues for life. Others differ: NZ Seniors and OneChoice say no premiums after 85; AA Life premiums run to the anniversary after the 90th birthday; Chubb's stop at claim, at 90, or on entering long-term care; Greenwich Life's stop when the total paid equals the benefit (AA Life, Chubb, Greenwich Life). No single "premiums stop at" age is true across insurers. The question is covered on the when premiums stop page.

5. "The benefit pays for the funeral"

It pays a fixed sum of $3,000 to $30,000 towards costs. The wording says "the Benefit amount you chose may not cover the cost of a Life Insured's funeral". FDANZ's 2026 report puts a full funeral with 50 guests at $11,700 for a cremation and $14,300 for a burial, and an unattended cremation at $4,700 (FDANZ, 2026 New Zealand Funeral Industry Trends Report). A $10,000 benefit is below the first two figures and above the third. Accidental death pays three times the chosen benefit.

6. "I always get back more than I pay in"

Not always. The wording says: "depending on how long you keep your cover, the total premiums you pay to us could exceed the Benefit we pay to you". The Insurance & Financial Services Ombudsman Scheme said in December 2025 that insurers should warn customers they may pay more than they get back, in the policy, on the website and in advertising (IFSO: Funeral insurance, what consumers need to know). It depends on the age you start and how long you live. Not every product works the same way: Greenwich Life says premiums stop as soon as the total paid equals the funeral benefit.

7. "The insurer pays the funeral director"

Momentum cannot. The beneficiary must be a "natural person", and the wording says Momentum "can't pay a Benefit directly to a company, charity or other organisation". Benefit payments go to the policy owner, or if the owner has died, to the nominated beneficiaries, and otherwise to the executor. Momentum says valid claims are usually paid within 24 to 48 hours of approval, which is not the same as 24 to 48 hours after the death. See does funeral insurance pay the funeral director.

8. "No health questions means no paperwork or checks"

Half right. There are no medicals, health questions or paperwork to get cover. At claim time Momentum can ask for proof, which "may include" a form completed by a medical practitioner, a death certificate and other information it reasonably requires. The duty of disclosure still applies: information you give must be true, correct and complete, and if it is misleading Momentum may decline a claim, cancel the policy or reduce the benefit. Age and residency are the main facts to get right.

9. "Funeral insurance is the same as a prepaid funeral"

They are different products. Insurance pays a benefit to a person; cancelling after the free look returns nothing, and the wording says it is "not a savings or investment plan". A prepaid plan is money set aside with a trust or provider. FDANZ says its Now For Them plan is "not a savings or investment product" and pays no interest (FDANZ: Now For Them). How each is treated for the Funeral Grant and the residential-care asset test is set by Work and Income and the Ministry of Social Development, so check with them. Compare on funeral insurance versus a prepaid funeral.

10. "The Funeral Grant makes insurance unnecessary" or "insurance replaces the grant"

Neither. The Work and Income Funeral Grant has a maximum of $2,697.43 (page updated 24 June 2026), is paid on tests of the relationship to the person who died, and for partners and children on income, and a prepaid funeral account counts as an asset in its test, so it can affect whether you get it (Work and Income: Funeral Grant). The maximum grant is about 23% of the $11,700 cremation scenario, so it rarely covers a full funeral. Read funeral insurance versus the grant.

A short list of other limits

No terminal illness benefit. Momentum's Funeral Insurance has none. NZ Seniors and OneChoice state a terminal illness benefit.
Free look. 30 days from the Acceptance Date, full refund if no claim. After that, cancelling returns nothing.
Cap. $30,000 per life across all Momentum funeral policies.
Entry age. 40 to 75. Nobody older can be accepted.

Before you believe a claim about funeral insurance

Ask which product it is about, which clause it comes from, and the date. Momentum Life holds an A.M. Best rating of B (Fair), in the range Momentum calls "Vulnerable"; see its financial strength page. The buttons on this page open Momentum Life's online application, one option among several; see how the options differ. 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 see the Funeral Cover plan page.