FAIR GO: Eager to spare her children the cost of a funeral, Bronwen Christianos paid thousands into a policy that made little financial sense but proved very difficult to exit. Gill Higgins reports.
Insurance warning: 'Don’t do it!' – Watch this story on TVNZ+
When Bronwen Christianos signed up for NZ Seniors funeral insurance at age 78, she thought she was doing the right thing. Having had two strokes and years of financial struggle as a single mother of eight, her motivation was simple – “so I wouldn’t be a burden to my children.”
But three years later, her daughter Rachel Adams took a hard look at the policy and was shocked. “I would definitely warn people against getting [this] funeral insurance.”
Christianos had been paying $110 every fortnight for a $12,000 payout upon death. The policy required premiums to be paid for a year before the standard funeral cover kicked in. Payments then continue until age 85. If Christianos died after this, she would have spent $20,000 to get $12,000 back. Unless she died within three or so years of taking out the policy, it didn’t seem to make financial sense.
Rebecca Styles from Consumer NZ agrees. “If you keep living, you're not likely to get the value that is promised.”
Adams and the rest of the family were happy to pay for any funeral costs themselves, so they suggested their Mum cancel the insurance.
This proved much harder than expected.
When Christianos first tried to cancel by phone she was persuaded to keep the policy active. She settled for reducing the premiums to about $27 per fortnight. But a reduction in premiums means a reduction in the final payout. The standard funeral payout plummeted to $3000 payable either upon the death of the policy holder, or if they were diagnosed with a terminal illness. A tiny amount given Christianos had already paid $9000. The problem was that if she cancelled, she’d lose the total amount. She felt stuck between a rock and a hard place.
Her daughter thought she should still cancel, rather than throw good money after bad, as she wanted her mum to spend her savings on herself.
So Christianos tried to cancel again. This time by email as she found the phone conversation hard to follow. “I just get really confused… which makes me sound pathetic, but it's the truth.”
But NZ Seniors responded with a call and again persuaded Christianos to keep the policy active. The customer service representative listed the benefits and offered a discount saying “New Zealand Seniors could cover the next regular premium for you… You don’t need to worry about paying that one.” In other words, a saving of $27.
'It shouldn't be that hard to cancel'
Consumer NZ says that’s not how it should work. “You shouldn't be getting a sales pitch to keep you on. You should be given the consequences of cancelling – sure, that's fair, but don't give them another sales pitch, it shouldn’t be that hard to cancel.”
Adams stepped in and called on her mum’s behalf, but NZ Seniors said the request had to be in writing and from Christianos herself. Adams helped Christianos to write the letter but again, NZ Seniors contacted Christianos by phone and again persuaded her to keep paying.
The attempts to cancel the policy (including two in writing as the policy required), occurred over six months and left Adams furious. If her mum continued to pay at this new rate, she would still have parted with $12,000 by the age of 85 for the $3000 payout. Even if she were paid the highest amount, awarded in the case of accidental death, it would still only be a $9000 payout, so $3000 less than she’d forked out herself.
Adams made a formal complaint to NZ Seniors and requested all the voice recordings. She claimed that NZ Seniors had engaged in "predatory and exploitative behaviour, targeting a vulnerable elderly person who had already exercised their right to cancel".
Finally, the insurance was cancelled and a refund of $300 was paid out to cover the premiums paid by Christianos since her first request to cancel. The accompanying email said the payment was “a gesture of goodwill” as “no errors had occurred”.
1News got in touch with NZ Seniors, too. The company said its calls are “a safeguard to ensure we act on the wishes of the insured party”, adding that its representatives are trained to spot dementia and other vulnerabilities and refer up to a senior supervisor if necessary.
Insurance warning: 'Don’t do it!' – Watch this story on TVNZ+
A smart alternative to funeral insurance
Consumer NZ and the financial advice website, MoneyHub NZ, have both been concerned about several funeral insurance products for some time, saying people would be better to put money into a high interest savings account. But NZ Seniors says it’s policy is “not a savings product, but a protection product”, and that its conduct “aligns with industry standards".
The way funeral insurance operates is likely to be scrutinised further in 2027 when the Financial Markets Authority is given greater authority to improve outcomes for consumers and ensure fair conduct.
Adams is just relieved her mum is finally free of this financial burden and she warns others against taking out this type of insurance. “It doesn't make any sense. Don't do it.”
Have you had a challenging experience involving funeral insurance? Drop us a line at fairgo@tvnz.co.nz. We'd love to hear your story.
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