Funeral prepayment options in New Zealand

It depends on the model. Director-contract prepayment — where you contract a specific funeral director today for specific services — does lock in today's prices for the services in that contract. InvoCare NZ states this directly on funeralplanner.co.nz: "Once you pay the agreed cost of the funeral there is nothing more to pay" and you can "pay for a future service in today's dollars." Trust-pool prepayment — where you place money in The Funeral Trust or Public Trust — does not lock in prices. The Funeral Trust itself states that "funeral estimates are not fixed and are subject to inflation." Your fund grows with interest, but the funeral cost at the time of death is not guaranteed.

Money set aside in a recognised prepaid funeral plan or trust, up to NZ$10,000, is excluded from Work and Income asset testing for the Residential Care Subsidy. Consumer NZ confirms this exemption. The exemption is the main practical reason older New Zealanders choose to prepay — it shields up to NZ$10,000 of savings from the asset test when applying for the subsidy.

No. Funeral insurance is a different product entirely. You pay a monthly premium for life, and on death your beneficiary receives a lump sum. The lump sum is not earmarked for the funeral — your family decides how to use it. NZ Seniors, OneChoice, AA Life and Chubb Life offer funeral insurance in NZ, typically with cover bands of NZ$3,000–$30,000. A prepaid plan, by contrast, sets aside money specifically for the funeral, either as a contract with a director or as a trust fund.

Trust-pool plans (FDANZ Funeral Trust, Public Trust) hold your money outside the funeral director — typically in BNZ, Westpac or government-guaranteed funds. The director going out of business does not affect your funds. Director-contract plans rely on the director still operating at the time of death; some operate trustee structures (e.g. Lamb & Hayward Funeral Trustee Limited, Legacy Prepaid Funerals Ltd) that ring-fence your funds in BNZ accounts. Always ask which structure your prepayment uses before committing.

It depends on the model. FDANZ Funeral Trust funds can transfer between FDANZ-member directors. Funeral-Link plans transfer within the Funeral-Link network — interest may be forfeited if you switch to a non-member. Public Trust's Prepaid Funeral Trust is provider-agnostic (use any director on death). Director-specific contracts (InvoCare brands, Legacy, Lamb & Hayward) are generally tied to that specific provider or network. If portability matters — for example, you may move regions — pick a trust-pool or Public Trust plan, not a director contract.

The MSD Funeral Grant pays up to NZ$2,559.81 for eligible NZ residents, separately from any prepayment. It is means-tested against the deceased's estate and surviving partner. Prepayment does not increase or decrease eligibility — it sits alongside the grant. If you have a small prepaid amount plus the MSD grant, both apply.

Because The Funeral Trust is a trust-pool product, not a director contract. You contribute funds, the trust earns interest, and when you die the funeral director draws the cost of the funeral from your account. If funeral costs rise faster than your interest earnings, your family pays the gap. The trust does not guarantee the cost. This is structurally different from a director-contract prepay, where the director commits to delivering specified services at the contracted price regardless of inflation, subject to them still operating.

If you value price-lock on a specific funeral and you trust your chosen director to still be operating in 10–20+ years, a director-contract plan (InvoCare brands, Legacy, Lamb & Hayward) is the right shape. If you value portability and protection from director risk, a trust-pool plan (FDANZ Funeral Trust, Public Trust) is the right shape. If you want money for your family to spend however they decide, a funeral insurance policy (NZ Seniors, OneChoice, AA Life, Chubb Life) is the right shape. If you only want to record your wishes without committing money, the free Te Hokinga ā Wairua / My plan service is the right shape. Often two are combined — for example, a small trust-pool amount up to the NZ$10,000 RCS exemption plus a wish-record.