How funeral insurance differs from life insurance

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 pays a small fixed sum towards funeral costs, with no health questions: $3,000 to $30,000 at Momentum Life, which accepts ages 40 to 75. Life insurance pays a larger sum to protect people who depend on you, such as $50,000 to $300,000 under Momentum's Quick Life for ages 18 to 65, and more under underwritten cover, which usually asks health questions.

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Funeral cover See your price Ages 40–75 · $3k–$30k Life cover See your price Ages 18–65 · $50k–$300k

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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.

Funeral insurance is a whole-of-life policy of modest size: a fixed benefit paid on death, in return for a regular premium that, at Momentum, is level each year until the 89th birthday. Life insurance pays a lump sum on death, and often on terminal illness, so people who depend on you can meet debts, a mortgage and living costs, as well as the funeral. In the first 24 months of Momentum's Funeral Insurance, only an accidental death pays, and any other death refunds the premiums. Quick Life excludes pre-existing conditions and suicide for the first 2 years. Funeral premiums can end up larger than the benefit, and the benefit may not cover a whole funeral. The two products are not rivals on price, because they do different jobs.

What is the difference between funeral insurance and life insurance?

There are really three things on offer, and the labels blur them. Funeral cover is guaranteed acceptance and aimed at the funeral. Some life cover is also guaranteed acceptance, with no health questions. The rest of life cover is underwritten: the insurer asks about health, sometimes tests, then sets terms.

	Funeral insurance (Momentum)	Guaranteed-acceptance life (Quick Life)	Underwritten life cover
Aim	A fixed sum towards the funeral	Lump sum for dependants or debts	Lump sum for dependants, debts and income
Benefit	$3,000 to $30,000; triple for accidental death	$50,000 to $300,000, rising 3% a year to a $500,000 cap per person	Chosen to need; for example AIA Essentials covers $50,000 to $1,000,000 (AIA), and Chubb's Assurance Extra Life Cover has no maximum sum from age 16 (Chubb)
Entry ages	40 to 75	18 to 65	Varies; Fidelity Life, for example, is 16 to 75
Health questions	None	None	Yes, with terms that depend on your health
First two years	24 months: only an accident pays; other deaths refund premiums	2 years: pre-existing conditions and suicide excluded	Suicide exclusions are common; check the wording
Premiums	Level until the 89th birthday, then none	Stepped each year until 75, then fixed	Stepped or level, depending on the policy
Terminal illness	None	Yes, within 12 months	Usually yes
Payout	Usually within 24 to 48 hours of approval	Usually within 48 hours of approval	Varies by insurer

Sources are the policy wordings and insurers' own pages, read on 17 to 20 October 2026; links are in the references. Premium structure differs too. Funeral insurers' premiums can change for everyone on a plan with notice; stepped life premiums rise as you age (Momentum Life: Funeral Insurance Policy Wording, Momentum Life: Quick Life Insurance Policy Wording).

How do benefit amounts compare?

A funeral policy is sized to a funeral. The Funeral Directors Association of New Zealand (FDANZ) 2026 report gives an average of $11,700 for a cremation and $14,300 for a burial, for a full funeral with 50 guests (FDANZ: 2026 New Zealand Funeral Industry Trends Report). Funeral policies cap at $30,000 per person at Momentum, AA Life and Chubb. A $30,000 cap applies across all of a person's Momentum funeral policies.

Life cover is sized to the people who depend on you. Debts, a mortgage and several years of income are far larger than a funeral, so life policies run to hundreds of thousands of dollars or more. If your family would need more than a funeral paid for, funeral cover cannot do that job alone.

How does underwriting differ?

Underwriting is the insurer's assessment of your risk before it accepts you. Guaranteed-acceptance products skip it and pay for that by restricting the early years. Underwritten cover asks first.

For funeral cover, Momentum asks only for age and residency checks. For underwritten life cover, requirements depend on age and amount. At the entry level, the two insurers whose guides we read ask for little: Fidelity an application form and Chubb a personal statement, for cover up to $500,000 at any age. From $500,001 at ages 61 and over they ask for more evidence, such as a GP medical report and blood tests (Chubb: Essential underwriting guide, May 2025). Disclosed conditions can trigger more. If you have a condition, an insurer may still offer cover by adding a stand-down period, raising the premium, or excluding the condition (Asteron). A healthy person can usually get more cover for less with fully underwritten cover through a licensed adviser. Answer every health question completely, because a policy bought on incomplete answers may not pay (IFSO). See guaranteed acceptance vs full medical.

How do premiums compare over time?

We do not give a like-for-like price, because the products and the people priced differ. What can be said is how each premium behaves.

Funeral insurance at Momentum. Level for each year until the 89th birthday, so a policy bought at 40 means 49 years of premiums. Total premiums can end up larger than the benefit. IFSO's case note on a $20,000 funeral policy with premiums to age 90 says "It is not a savings product" (IFSO: Funeral insurance case). Funeral insurers rarely publish prices; of those we reviewed, only AA does, from $14.28 a week for $10,000 for a 66-year-old female AA Member non-smoker (AA Life).
Stepped life cover. Cheap at young ages and rising each year. QuoteHub's Premium Index, from insurers' published rate cards as at 8 September 2026, shows $500,000 of stepped life cover for a non-smoker at age 40 at about $40 to $50 a month for a man and $35 to $40 for a woman, rising to $90 to $120 and $80 to $100 at 50. Occupation class 1, standard rates, and your own premium depends on underwriting; see the method and the life insurance rate tables.
Level life cover. Starts higher and stays the same for the term, subject to the policy's rate-change terms (Fidelity Life).

Neither type is "cheaper" in general. The comparison that matters is cost against the cover you actually need.

When is funeral insurance more suitable?

It can suit someone aged 40 to 75 who wants a defined sum set aside, who would find health questions a barrier, who understands the 24-month rule, and who has no one financially dependent on them. It also suits someone who has been declined for life cover and wants something simple. It suits less well when the person is young, when savings could do the same job, or when a death is already expected.

When is life insurance more suitable?

It suits anyone with debts, a mortgage, children or a partner who relies on their income. A healthy person can usually get more cover for less through underwritten cover than through guaranteed acceptance. If you pay stepped premiums, check whether you can keep paying as you age.

Can life insurance pay for a funeral?

Yes, because the benefit goes to a person who can use it as they see fit. Some life policies build a funeral sum into the cover. Kiwibank's life cover, provided by nib nz limited, includes a $15,000 lump sum for funeral expenses (Kiwibank: Life insurance), and Southern Cross Life's Bereavement Support Benefit pays up to $25,000 of the life cover early, ahead of the main claim (Southern Cross Life). Asteron also advances funeral money once a claim is accepted (Asteron: Life insurance). Payouts of this kind are generally not taxable income, according to Inland Revenue (IRD: Insurance payouts). See also life insurance with funeral cover.

Can you have both?

Yes. A person can hold life cover for dependants and a funeral policy for the funeral. Momentum caps its funeral benefit at $30,000 per person across all its funeral policies, and Quick Life has a combined limit across a person's Momentum cover. Check how any new policy interacts with the ones you have. Our funeral insurance cost page explains why we do not publish exact premiums.

Where to get advice

The buttons on this page open Momentum Life's online application. Funeral Insurance is for ages 40 to 75 and Quick Life for 18 to 65. Momentum's A.M. Best rating is B (Fair); see 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. A licensed adviser can compare other insurers and underwritten cover on your own details. 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, the funeral cover page and the Quick Life page.

Get a quote and apply online today

See your price in about a minute, then apply online with Momentum Life. Guaranteed acceptance, no health questions, no medical exams.

Funeral cover See your price Ages 40–75 · $3k–$30k Life cover See your price Ages 18–65 · $50k–$300k

Want more cover or have questions? Talk to an adviser

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.

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

Adviser's view

They answer different questions. Funeral insurance is a small fixed sum aimed at the funeral and asks no health questions, but it limits the first 24 months and its premiums can add up to more than the benefit. Life insurance is built for dependants, pays far more and usually asks health questions. If anyone relies on your income, life cover is usually the first question; funeral cover is the optional add-on.

Henry Smith, Financial Adviser (FSP1010699). General information, not personalised financial advice.

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Cite this page QuoteHub NZ (2026). Funeral Insurance vs Life Insurance NZ. www.quotehub.co.nz/funeral-insurance/funeral-insurance-vs-life-insurance-nz. Updated 2026-10-20.

References

Explore related pages: Life Insurance, Income Protection, Health Insurance, Trauma Insurance, For Brokers.