How to save for your funeral in New Zealand

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.

Saving for your own funeral means putting money into a separate bank account and leaving it for that purpose. It costs nothing in premiums, never expires and can be spent on something else if your plans change. The catch is that bank accounts are frozen when the holder dies, although banks can release money to pay for the funeral without waiting for probate.

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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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A funeral fund is a sum you set aside yourself, rather than a prepaid funeral trust (a trust run by a provider that holds your money for a funeral) or an insurance policy that pays a fixed benefit. A savings account at a bank is not a prepaid funeral trust: the money stays yours, you can withdraw it, and it falls into your estate when you die. That is its strength and its risk. The sections below set a target, show what saving it takes, explain how the bank treats the account after your death, and say where saving is not enough.

Set a target from real costs

The Funeral Directors Association of New Zealand (FDANZ) 2026 report, based on a 2025 member survey, gives three scenarios (FDANZ, 2026 New Zealand Funeral Industry Trends Report):

Scenario	Average	Range
Full cremation funeral, 50 attendees at a funeral home	$11,700	$10,000 to $13,900
The same with a burial	$14,300	$12,800 to $17,000
Unattended cremation, no service	$4,700	Not published

Pick the scenario closest to what you want, then add costs outside the scenario such as a headstone. Prices vary by council, so check the cemetery fees where you live; our funeral cost calculator and funeral costs hub help. Costs will probably be higher by the time you need the money, so review your target every year or two.

What saving it takes

This table is arithmetic only. It divides each target evenly over the time shown, with no interest and no allowance for price rises.

Target	5 years	10 years	20 years
$4,700	about $78 a month	about $39 a month	about $20 a month
$11,700	about $195 a month	about $98 a month	about $49 a month
$14,300	about $238 a month	about $119 a month	about $60 a month

Interest would shorten these times a little, and rising prices would lengthen them. A longer horizon needs smaller payments, which is the main reason to start early. It also leaves a long stretch in which the fund is only part full.

How to set up a funeral fund

Choose the target from the scenarios above.
Open a separate account you will not dip into. Ask the bank whether the account has notice or term conditions, because those can slow access.
Automate the transfer on payday so that saving does not depend on remembering.
Tell your executor that the account exists, and where the paperwork is. Money nobody knows about does not help.
Write down your wishes and keep them with your will; see preplanning a funeral. The executor has the final say, and written wishes are not legally binding on the family (Community Law).
Review each year against current prices.

What happens to the money after you die

When an account holder dies, the bank freezes their accounts, but funds can be released to pay for the funeral. You do not need to be the executor or wait for probate or letters of administration (govt.nz: What to do when someone dies). Consumer NZ says the bank will need to see the death certificate and the funeral home's invoice, and will pay the bill directly (Consumer NZ). The Citizens Advice Bureau adds that you apply to the bank, which can reimburse whoever has already paid on proof of payment, and that banks may set an upper limit or exclude some costs, such as food after the service, so check with the bank (Citizens Advice Bureau: Can I pay for a funeral from the deceased person's bank account?, last checked 26 November 2024).

Two other rules matter:

A joint account passes to the surviving owner immediately and in full, and is not part of the estate (Community Law). That helps a couple, but then the money is in the survivor's hands.
Small sums without probate. Under section 65 of the Administration Act 1969, a bank may pay a sum up to the prescribed amount to a partner, children or others entitled, without a grant of administration, if they apply. That amount has been $40,000 since 24 September 2025; $15,000 now applies only to government stock and company shares (Administration Act 1969; Public Trust media release). The bank may choose whether to pay, and the limit applies per payer, not to the whole estate (Community Law). Section 65(3) lets a payer use a small sum for the funeral only where no one has applied under section 65(2). Do not rely on this route; the funeral release above is the usual one.

Savings, insurance and prepaid trusts compared

	Own savings	Prepaid funeral trust	Funeral insurance
Premiums	None	None, but fees may apply	Yes, for years
Waiting period	None	None	24 months (Momentum)
Can you spend it on something else?	Yes	Usually not	No: cancel after the 30-day free look and premiums are not refunded
Pays in full if you die early?	No: only what you have saved	Only what you have paid in	Not for 24 months: accidental death only, otherwise premiums are refunded
Counts in the Funeral Grant test?	Yes, as a cash asset	Yes, the account balance counts	Work and Income says prepaid funeral cover can affect the grant
Interest	Bank rate	Depends on the provider	None

Funeral insurance is a different tool. Momentum Life's Funeral Insurance, issued by Momentum Life Limited, accepts New Zealanders aged 40 to 75 with benefits of $3,000 to $30,000 and no health questions. For the first 24 months it pays only for accidental death (within 90 days of the accident); any other death in that window pays no benefit and all premiums for that person are refunded. This is not a savings or investment plan: depending on how long you keep your cover, the total premiums you pay could exceed the benefit, and the benefit may not cover the cost of a funeral. Savings are the other way to prepare. Momentum's A.M. Best rating is B (Fair); see its financial strength page. For the trust option see Public Trust's prepaid funeral trust and is a prepaid funeral worth it. A formal trust is a different product from a high-interest account, with its own fees and access rules.

What if you die before the fund is full?

Then the fund covers part of the funeral, and the rest falls to the estate or the family. The family may have other help: the Work and Income Funeral Grant is up to $2,697.43 as at 1 April 2026. It tests whether the funeral can be paid from the person's assets, so your savings count as assets and are deducted from the expenses, and the grant is the lesser of the maximum or the unpaid balance (Work and Income: Funeral Grant). A larger fund can therefore shrink a grant, but it also means the family needs less help. See the Funeral Grant guide.

Retirement savings are not a quick source. On death a KiwiSaver balance is paid to the estate through a grant of administration, or under the section 65 route, rather than to a named person (scheme legislation, Schedule 1 clause 9).

Where to get advice

The buttons on this page open Momentum Life's online application, one option among several; savings need no product at all. 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. Advice is provided by Craig Smith Business Services Limited, trading as Smiths Insurance & KiwiSaver, a licensed Financial Advice Provider (FSP712931). See also the funeral insurance hub and prepaid funerals under 50.

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

Savings are a flexible way to prepare, because there are no premiums, no waiting period and you can spend the money on something else. The weakness is time: if you die before the fund is full there is a gap. Savings can also reduce the Funeral Grant, so tell your executor where the money is.

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

Talk to a licensed adviser about funeral cover · free, no obligation.

Cite this page QuoteHub NZ (2026). Saving for Funeral Costs NZ: Building a Funeral Fund. www.quotehub.co.nz/guides/when-someone-dies/saving-for-funeral-costs-nz. Updated 2026-10-20.

References

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