How to pay for a funeral in New Zealand: seven options compared
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.
New Zealand families cover a funeral, which FDANZ's 2026 survey puts at $11,700 to $14,300 on average for a full attended service, from seven main sources: the deceased's own estate, the WINZ funeral grant, an ACC funeral grant, a prepaid funeral plan, funeral insurance, funeral finance, or direct family contribution (FDANZ, Funeral costs and financial support, retrieved 9 September 2026). Most families combine two or more of these.
The seven ways to pay
Each option suits a different situation, and understanding what each one actually covers is more useful than assuming any single option will pay for everything.
FDANZ states that funerals can be paid from the estate of the deceased, a pre-paid funeral plan, or by the person organising and arranging the funeral, often with support from extended whānau and family, and that Government grants exist to assist in certain situations (FDANZ, retrieved 9 September 2026). The table below sets out all seven options together.
| Option | How it works | Typical scale |
|---|---|---|
| 1. The deceased's estate | Funeral costs are generally paid from estate funds before other debts, sometimes via a bank releasing money under the small-estates rule | Covers the full bill if the estate has sufficient funds |
| 2. WINZ Funeral Grant | Up to $2,697.43, income and asset tested | Partial contribution for most funerals |
| 3. ACC funeral grant | Up to $8,236.40, tax-free, accident deaths only | Substantial contribution where it applies |
| 4. Prepaid funeral plan (funeral trust) | Money set aside in advance with a funeral home or industry trust | Can cover the full funeral if fully prepaid |
| 5. Funeral insurance or a life policy's funeral advance | A sum insured or advance paid on death | Varies by policy, commonly $10,000–$25,000 |
| 6. Funeral finance (a loan) | A finance provider pays the funeral home; the family repays over time | Covers the full bill, with interest and fees after any interest-free period |
| 7. Family or community contribution | Whānau, friends, or a charitable organisation contribute | Varies |
(FDANZ, Funeral costs and financial support, retrieved 9 September 2026.)
Who pays for a funeral when there is no money in NZ?
The estate pays first if it has assets; where it does not, the WINZ Funeral Grant, an ACC funeral grant if the death was accident-related, and, for a person with no money and no next of kin, some councils will waive or reduce their cremation or burial fee (FDANZ, retrieved 9 September 2026). Speaking to the funeral director early about budget constraints is the practical first step.
Option 1: The estate
The estate is the default source, but accessing it takes time, which is why families often need a bridging option in the meantime.
Funeral costs are generally treated as a priority debt of the estate, paid before most other creditors, and can sometimes be paid directly by a bank, insurer or employer under the Administration Act 1969 small-estates provision without waiting for full probate, where the amount is under $40,000. Our guide to what happens to debt when someone dies explains the order in which an estate's obligations are paid.
Option 2 and 3: Government grants
These two grants are the most commonly used public support, and both are worth applying for even if the estate can eventually cover the cost, since neither has to be repaid once approved correctly.
How much does Winz pay for funeral costs?
Up to $2,697.43, subject to income and asset tests that depend on the applicant's relationship to the person who died. See our WINZ funeral grant guide for the full eligibility rules.
Does ACC pay more than Work and Income for a funeral?
Yes, considerably more, but only where the death qualifies. ACC's funeral grant is up to $8,236.40, tax-free, against Work and Income's $2,697.43, but ACC's grant applies only where the death is from an injury ACC covers, while the WINZ grant applies to any death subject to its own tests (ACC; Work and Income; retrieved 9 September 2026). See our ACC funeral grant guide for eligibility.
Option 4: A prepaid funeral plan
A prepaid plan is arranged before death, so it only helps if the deceased had already set one up, but it is worth understanding for anyone planning ahead for themselves or a family member.
FDANZ's own charitable prepayment scheme, Now For Them, run by The Funeral Trust Services Limited, lets a person contribute money in advance towards their funeral costs; it is explicitly not a savings or investment product, and no interest or return is paid on contributions (FDANZ, Now For Them, retrieved 9 September 2026). The table below sets out the plan's published terms.
| Term | Detail |
|---|---|
| Minimum initial prepayment | $200 |
| Minimum ongoing instalment (automatic payment) | $20 per fortnight |
| Minimum instalment (not automated) | $500 |
| Maximum contribution | No maximum, though only the first $10,000 is excluded from residential care asset testing |
| Interest or return paid | None; explicitly not a savings or investment product |
(The Funeral Trust, FAQs; FDANZ, Now For Them; retrieved 9 September 2026.)
Does a prepaid funeral plan affect residential care subsidy asset testing?
Yes, favourably. The first $10,000 held in a plan like Now For Them is currently excluded from Ministry of Social Development residential care asset testing, though this is described as "current" government policy and could change (FDANZ, retrieved 9 September 2026). Money above $10,000 in the plan does not receive this exclusion.
Can I set up a prepaid funeral plan for someone else?
Yes. The Funeral Trust confirms it is common to preplan a funeral for a family member or loved one, with confidentiality assured, and correspondence sent to the person arranging the plan rather than the person the plan is for (The Funeral Trust, retrieved 9 September 2026).
What happens to leftover money in a joint funeral trust plan?
Where a couple hold a joint plan and the first partner dies, the prepaid amount is used toward that funeral, and any remaining funds can either stay in the trust for the surviving partner's future funeral or be returned to the estate at that time (The Funeral Trust, retrieved 9 September 2026).
Option 5: Funeral insurance or a life policy's advance
This option only helps if cover was already in place before the death, which is the core limitation of every insurance-based option.
Funeral insurance is a standalone product sold specifically to cover funeral costs, separate from general life insurance; our funeral insurance comparison covers how these policies work. A standard life insurance policy can also include a bereavement or funeral advance, a portion of the sum insured released quickly on notification of death, before probate is finalised: see how a life insurance payout works after death.
Option 6: Funeral finance (a loan)
For families with no prior cover and an estate that cannot pay immediately, some funeral homes offer or arrange finance specifically for the funeral bill.
Some funeral homes partner with a dedicated finance provider to let families spread the cost of a funeral across smaller payments, sometimes with an interest-free period; one Auckland funeral home, for example, advertises finance through Gilrose Finance with no interest for the first three months and a quick decision (Davis Funerals, Funeral finance, retrieved 9 September 2026). Funeral finance is a loan like any other, so the full fees and interest rate should be checked directly with the finance provider before signing.
Should I take out a loan to pay for a funeral?
That depends on the interest rate, any interest-free period, and whether the estate or a grant will reimburse the amount later. FDANZ recommends seeking financial advice before applying for finance of this kind (Davis Funerals, retrieved 9 September 2026), and comparing a funeral loan's total cost against simply asking the funeral director for a payment plan or reducing the scope of the service, such as choosing a direct cremation, is worth doing first.
Option 7: Family, whānau and community contribution
Where no other source covers the full bill, direct contribution from people close to the deceased remains common, and several organised channels exist beyond simply asking around.
FDANZ notes charitable support may be available through agencies such as the Salvation Army, and some families use GiveALittle or similar online donation campaigns; Māori may also be able to access a grant for tangihanga from their iwi organisation or a Māori land trust (FDANZ, retrieved 9 September 2026). Our tangihanga costs, leave and support guide covers these Māori-specific funding channels in more detail.
More questions about paying for a funeral
Can a funeral director start work before payment is arranged?
Yes, in practice, since a body needs care and arrangements made regardless of how payment will eventually be settled. FDANZ's guidance encourages families to explain budget restrictions to their funeral director upfront, and directors will discuss cheaper alternatives, such as a direct cremation, where cost is a genuine concern (FDANZ, retrieved 9 September 2026).
Do I have to use the funeral home the deceased prepaid with?
Not necessarily. The Funeral Trust states that Now For Them offers "flexibility to change your funeral home if circumstances change" (FDANZ, retrieved 9 September 2026), so a prepaid plan does not lock a family into one specific provider in every case, though the details should be checked with the specific plan.
What is the difference between funeral insurance and a prepaid funeral plan?
A prepaid plan holds money you have actually contributed, with no interest paid and the full amount available once contributed; funeral insurance is a policy where you pay ongoing premiums for a sum insured that becomes payable on death, similar to a small life insurance policy. Our funeral insurance comparison sets out how premiums, waiting periods and payout amounts compare across NZ providers.
Is funeral insurance worth it compared with just saving the money?
That depends on how long you expect to pay premiums against the sum insured, and whether you might die before enough is saved. Our guide to funeral insurance for seniors and comparison of funeral insurers cover this trade-off directly, and a licensed adviser can model it against your own situation.
Can a bank release funeral money before probate is granted?
Yes, potentially, under the Administration Act 1969's small-estates provision, which lets a bank, insurer or employer pay out up to $40,000 directly to an appropriate person without a grant of administration, and section 65(3) specifically allows this money to be used to pay funeral expenses or refund someone who already paid them (New Zealand Legislation, retrieved 9 September 2026).
What if the person who died had no life insurance, no prepaid plan and a small estate?
This is the situation the WINZ Funeral Grant and ACC funeral grant are designed for. Applying for both (where eligible), asking the funeral director about a reduced-scope option such as a direct cremation, and checking for council fee waivers or charitable support are the realistic remaining paths (FDANZ, retrieved 9 September 2026).
How the options compare on speed
Timing matters as much as cost, because a funeral usually needs paying for within days, well before probate or a full grant decision comes through.
| Option | Typical time to access funds |
|---|---|
| Family/whānau contribution | Immediate |
| Funeral finance | Days, often with a quick online decision |
| WINZ Funeral Grant | Application-dependent; not published as a fixed number of days |
| ACC funeral grant | Application-dependent; ACC assigns a Cover Assessor to guide the process |
| Estate funds, under $40,000 | Days to weeks, if a bank agrees to pay under the Administration Act 1969 small-estates provision |
| Estate funds, over $40,000 | Weeks to months, generally after probate is granted |
(Work and Income; ACC; Administration Act 1969; retrieved 9 September 2026.)
QuoteHub's read is that the fastest, cheapest combination for most families is applying for both government grants immediately, reducing the funeral's scope where cost is a genuine concern, and only using funeral finance as a last resort once the interest terms are understood. 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. Reviewing life insurance or a standalone funeral policy while you are well is the way to remove this problem from a future family's hands entirely: start a free comparison.
Adviser's view
QuoteHub's view is that families treat these seven funding sources as alternatives, picking one, when most actually combine two or more: a grant applied for alongside estate access under the small-estates threshold, topped up by family contribution while a larger claim is still being assessed. The order money arrives in matters as much as how much arrives in total.
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Cite this page QuoteHub NZ (2026). How to Pay for a Funeral in NZ: 7 Options Compared. www.quotehub.co.nz/guides/when-someone-dies/paying-for-a-funeral-nz. Updated 2026-09-09.
References
- FDANZ: Funeral costs and financial support
- FDANZ: What is Now For Them?
- The Funeral Trust: FAQs
- Davis Funerals: Funeral finance
- Work and Income: Funeral Grant
- ACC: Financial support after a fatal injury
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