Life cover and funeral cover: what is different, and which rules apply to each

Funeral policies and microinsurance policies carry extra product standards in Rule 2A of the Policyholder Protection Rules: a waiting-period ceiling, no waiting period for accidents, fast claim deadlines and limits on exclusions. A life cover policy that is not one of those types falls under the general rules instead.

What is the difference between life cover and funeral cover?

Both products pay money when someone dies. The difference lies in the type of policy and the rules attached to it.

The Rules define a "funeral policy" as a life insurance policy underwritten under the funeral class of life insurance business in Table 1 of Schedule 2 of the Insurance Act, including a rider benefit that would be a funeral policy if it were a policy in its own right. A "microinsurance policy" is a life insurance policy underwritten by a microinsurer. Rule 2A, which was inserted in September 2018, sets product standards for those two types.

A life cover policy is not a funeral policy for the purposes of Rule 2A unless it falls within those definitions. Our life cover hub describes what it is for: replacing income for people who depend on you. Our funeral cover guide on what it pays for describes the other product. What each policy actually pays and when is set by its own terms. Olvian does not recommend either.

Whether a particular policy is a funeral policy or a microinsurance policy for the purposes of Rule 2A depends on how the insurer has written it. If you are unsure, ask the provider which class the policy is written under and which rules apply.

What do the extra funeral and microinsurance standards say?

Rule 2A sets out the following, among other things.

Waiting periods. Rule 2A.6.1 says a microinsurance or funeral policy may not impose a waiting period longer than the shorter of one quarter of the policy term or six months for a death, disability or health event resulting from natural causes. Rule 2A.6.2 says no waiting period may apply to an event resulting from an accident. Rule 2A.6.4 says none may apply when the policy is renewed. Rules 2A.6.5 and 2A.6.6 deal with a previous policy that the person had for at least 31 days with another insurer: if they completed the waiting period there, none may be imposed; if they had not, the new insurer may impose only the unexpired part. Our guide on waiting periods explained covers this in detail.

Exclusions. Rule 2A.7.1 says a funeral policy, or a microinsurance policy written in the funeral class, may not exclude a pre-existing health condition other than through the waiting period in Rule 2A.6.1. Rule 2A.7.2 says there may be no exclusion for suicide for longer than 12 months from the policy's inception, and Rule 2A.7.3 says that limit applies even if the policy was renewed during those 12 months.

Claims. Rule 2A.8.1 says the insurer must, within two business days after all required documents for a claim have been received, assess the claim, decide whether it is valid and either authorise payment, repudiate it, or dispute it and notify the claimant. If it disputes the claim, Rule 2A.8.2 gives it a further 14 business days after the first period to investigate, decide and pay or repudiate.

Non-disclosure. Rule 2A.8.3 says an insurer may not repudiate a claim under a microinsurance or funeral policy on the basis of non-disclosure unless it specifically asked for that information before the policy began.

Which rules apply to a life cover policy?

The general rules apply to long-term policies, including those not covered by Rule 2A. The ones that matter most for life cover are these.

Misrepresentation and non-disclosure. Rule 21.1 says a policy must not be invalidated, and the insurer's obligations must not be excluded or limited, because of an untrue statement or a failure to disclose information, unless a reasonable, prudent person would consider it likely to have materially affected the insurer's ability to assess the risk. Rule 21.2 says information is material if a reasonable, prudent person would consider that it should have been correctly disclosed so that the insurer could form its own view of its effect on the risk. Our guide on what to tell a life cover insurer explains the detail.

Claims. Rule 17.6.1 requires an insurer to accept, repudiate or dispute a claim within a reasonable period after receiving it, and Rule 17.6.2 requires written notice of the decision within 10 days of taking it. If a claim is repudiated or disputed, the notice must give the reasons and tell the claimant that at least 90 days are available to make representations (Rule 17.6.3). See our guide on life cover claims.

Waiting periods. Rule 2A.6 is the rule that caps waiting periods, and it is written for funeral and microinsurance policies. For a life cover policy that is not one of those types, the waiting periods and any exclusions are those stated in the policy. Read them in the policy schedule and the exclusions list, and ask the provider if they are not clear. Rule 11.5.1(e) requires the insurer to give you, within 31 days of the policy starting, comprehensive details of all exclusions and limitations, with prominent disclosure of any significant ones.

Cooling-off, premiums and cancellation. These apply to long-term policies generally. Rule 4.2 gives a 31-day window to cancel a new policy if nothing has been claimed or paid. Rule 15A.1 provides a grace period after a missed premium.

Can you have both?

Nothing in the Rules cited in this guide forbids holding both kinds of policy. They are different contracts with different terms and different purposes.

Some things are worth knowing if you are thinking about it. Each policy has its own waiting periods, so a new policy's waiting period is counted from its own start date, subject to Rules 2A.6.5 and 2A.6.6 where those apply. Each policy has its own exclusions. And each has its own claims process, with its own paperwork and, for funeral policies, its own deadlines.

Whether holding more than one makes sense for you is not something Olvian can say. That is a question for the licensed provider or adviser who calls you. Our guide on more than one funeral policy discusses the funeral side.

What happens to a policy you replace?

If you are thinking of replacing a policy rather than adding to it, Rule 19 applies to individual risk policies where an intermediary was involved. The insurer must obtain confirmation from the intermediary of whether the new policy would be a replacement (Rule 19.2.1). If it is, the insurer must obtain a copy of the record of advice (Rule 19.2.2) and a senior manager must confirm in writing, within 14 days, that it complies with the disclosure requirements and contains enough information to show that the intermediary took reasonable steps to satisfy themselves that the replacement is more suitable than keeping or changing the old policy (Rule 19.2.4).

If an intermediary failed to disclose a replacement within six months of the new policy starting, Rule 19.2.5 requires the insurer to report it to the regulator and tell you that you may cancel the replacement policy within 31 days of being notified.

Before you cancel an old policy, check what you would lose. A new policy may start new waiting periods and new questions about your health, and Rule 21 would apply to the answers you give.

Where do you complain about either?

Start with the insurer. Rule 18 sets out the complaints framework insurers must run. If the insurer's answer does not resolve it, the National Financial Ombud Scheme (NFO) handles complaints about insurers, including long-term insurance, at no charge to the complainant. The NFO says it will look at a complaint only after you have first lodged it with the insurer. The FAIS Ombud handles complaints about financial advice from a financial services provider, and the Financial Sector Conduct Authority supervises market conduct.

How does Olvian fit in?

Olvian is a lead-referral service. You ask once, and your request goes to licensed providers who pay Olvian a fee and call you back. We do not sell insurance, give advice or recommend one product over another. If you are unsure which kind of cover you are asking about, tell the provider that when they call, and ask them to explain the policy type and the rules that apply to it.

Sources

Checked on 31 October 2026. Olvian is not a financial services provider and this guide is information, not advice.

• Policyholder Protection Rules (Long-term Insurance), Rule 2A.1: definitions
• Rule 2A.6: waiting periods
• Rule 2A.7: exclusions
• Rule 2A.8: claims
• Rule 17: claims management
• Rule 21: misrepresentation
• Rule 19: replacement of policies
• Rule 11: disclosure and Rule 4: cooling-off rights
• National Financial Ombud Scheme and FAIS Ombud