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Planning • 3 min read

The difference between Life and Funeral Insurance

Do I take out Life Insurance or Funeral Insurance—or both? Here are the key differences between Life Insurance and Funeral Insurance.

If you’re looking for an insurance policy to help your family in the event of your passing, then you may have asked yourself: do I take out Life Insurance, Funeral Insurance—or both? The answer depends on your needs and the needs of your family.

Life and Funeral Insurance are similar in many ways. Both require you to pay regular premiums. Both will provide your family with a payout upon your death. And both will help ease some of the financial burdens that can arise after you pass away.

However, there are still some key differences, mainly to do with eligibility, the level of cover on offer, and what the payment is intended to be used for. Understanding these differences will help you decide what kind of policy is best for you and your family.

Eligibility

Generally speaking, Funeral Insurance is available to any adult that fits the age requirements for taking out a policy that is outlined by the insurer. Often it can cover you, your spouse, and other adult members of your family, such as your parents.

Eligibility for Life Insurance, on the other hand, is usually based on factors like your age, medical history, whether you smoke, and other health- and pastime-related considerations. These factors affect whether you’re able to take out a life insurance policy and what your premiums will be.

Level of cover

Funeral Insurance policies usually have a maximum cover amount of $15,000 and while this can be used to cover debts or make other payments upon your death, it is intended to help cover the cost of your funeral.

With Life Insurance, you’ll generally be insured for a higher amount of cover compared to Funeral Insurance, because it’s designed to help replace some or all the income you would have provided for your family, instead of just enough to cover the funeral.

What the insurance payout is used for

A Funeral Insurance policy could be right for you if you need to plan for the cost of your funeral, but don’t need to support anyone on an ongoing basis. You might choose Funeral Insurance if you have no dependants, or if you’re no longer earning any income that needs to be replaced.

However, you might choose to buy a Life Insurance policy for the long-term financial security of dependants, like children, a spouse, or family members who rely on your income to get by. Life Insurance could also be a good idea if you have ongoing financial commitments, like a mortgage, that your family will have to take care of when you’re gone.

Should I buy both Life Insurance and Funeral Insurance?

If you have Life Insurance, it may include a feature of an advance payout to help cover funeral costs, in which case you may decide not to buy a separate Funeral Insurance policy.

If however, you are not eligible for Life Insurance or do not need the additional benefits provided, you may decide to purchase funeral insurance only.

Ultimately, the best form of insurance, and what you should buy, will depend upon your assessment of your personal circumstances.

Here is a summary of the differences between Insuranceline’s Life Insurance and Funeral Insurance.

Summary of the differences between Insuranceline’s Life Insurance and Funeral Insurance

 

Eligibility

Cover

Death

Terminal illness

Nominated beneficiaries

Premiums

Exclusions

Optional benefits

Other features

Discounts

More information

Life Insurance

Australian Residents aged 18 to 65
$100,000 - $1,500,000
✔
✔
✔
Based on your age each year you hold the policy and generally increase as you get older.
Suicide and intentional self-injury are not covered during the first 13 months of cover. If any other exclusions are to apply, we’ll discuss them with you first.
Please see our Combined Product Disclosure Statement (PDS) & Financial Services Guide (FSG) for full details on what is and isn’t covered by the policy.
• Optional Major Illness Cover
• Optional Cancer Cover
• Advance payout of $10,000 on approved claims to help with legal and other unexpected costs.
• Life events feature allows you to increase your cover amount along with the changing needs of your family, like taking out a new mortgage, or having a baby.
Family Discount—Add another adult to your policy and the youngest person will receive a 5% discount. The family discount doesn’t apply to the Optional Illness Covers.
Higher Cover Discount—Get a 10% discount on your premium for Life Cover from $200,001 to $400,000 plus a 15% discount on your premium for cover over $400,000. Does not apply to Basic Life Cover.
Enjoy 12 months for the price of 11 when you choose to pay your premiums annually.
Looking for more information?
Get an online Life Insurance quote now.
Find out more about how Life Insurance works.

Funeral Insurance

Australian residents age 40 to 80 can get a Funeral Insurance quote online or over the phone in minutes.
$3,000 - $15,000
✔
Accidental Death for the first 12 months of cover
Any cause of death after the first 12 months of cover
x
✔
Based on your age when you take out the policy. The cost will change if you make changes to your policy, such as increasing the Cover Amount, adding optional Benefits or other people to your Policy, or if the underlying premium rates are changed by us. However, your premiums won't be recalculated each year because of your age increasing.
When your cover starts you are only covered for Accidental Death for the first 12 months.
Please note that 'Accidental Death' does not include deaths that result from participating in unlawful activity, acts of war, undertaking a dangerous occupation or dangerous pursuits, actual or attempted self-injury or suicide, being under the influence of alcohol, illicit drugs, or pharmaceutical drugs taken other than as prescribed.
Please see our Combined Product Disclosure Statement (PDS) & Financial Services Guide (FSG) for full details on what is and isn’t covered by the policy.
Optional Accidental Death Cover up to $50,000—extra financial support for your family if you pass away as a result of physical injury caused by an Accident.
Please note that 'Accidental Death' does not include deaths that result from participating in unlawful activity, acts of war, undertaking a dangerous occupation or dangerous pursuits, actual or attempted self-injury or suicide, being under the influence of alcohol, illicit drugs, or pharmaceutical drugs taken other than as prescribed.
Value Promise—Our Value Promise means that at the time of a claim for the Funeral Insurance Benefit, we’ll pay the Funeral Insurance Cover Amount, plus any Bonus Cover, or 100% of the premiums paid toward your Funeral Insurance cover—whichever is greater.
If you are looking for a lower cost option, you may choose a 70% Value Promise so that at the time of a claim for the Funeral Insurance Benefit, we’ll pay the greater of the Funeral Insurance Cover Amount, plus any Bonus Cover, or 70% of the premiums paid toward your Funeral Insurance cover.+
Early Payout Option on the policy anniversary—After you turn 85 you can choose to cash in your policy and receive 120% of the average Funeral Insurance Cover Amount, not including Bonus Cover.#
10% Bonus Cover after 5 years to reward your loyalty at no extra cost.**
A 5% loyalty discount will apply after the 10th anniversary of cover or the Policy Anniversary after a Life Insured’s 84th birthday, whichever happens first.
Get a 5% multi-life discount when you add another adult under the same funeral insurance policy. The multi-life discount doesn’t apply to the optional Accidental Death Cover. 
Enjoy 12 months for the price of 11 when you choose to pay your premiums annually.
Looking for more information?
Get an online Funeral Insurance quote now
Find out more about Funeral Insurance for your parents
Find out more about Funeral Insurance for seniors
Important information

Cover under the Funeral Insurance Benefit is for Accidental Death only for the first 12 months of cover, including for any increases. Accidental Death has a special meaning in the PDS and some causes of death are excluded during this time—please refer to the PDS or call us for further details. After the first 12 months, the Funeral Insurance Benefit provides cover for all causes of death.

+ Highest payout is paid on receipt of a valid claim and is calculated on your Funeral Insurance Cover Amount or premiums paid toward your Funeral Insurance cover. The Insuranceline Value Promise does not apply where the cause of death is excluded, such as death other than Accidental Death in the first 12 months of cover. Read more about the Insuranceline Value Promise in the PDS.

# After the Policy Anniversary following a Life Insured reaching age 85, the Policy Owner can cash in the policy and receive a payout of 120% of the Life Insured’s average Funeral Insurance cover amount, excluding Bonus Cover, Accidental Death Cover. The Early Payout Option may affect entitlements to the age pension and other government benefits.

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^Insuranceline Win 1 of 5 $1000 Visa Cards (Competition). Subject to the Terms and Conditions, the Promotor is offering customers a chance to win one of five Digital Visa Gift Cards valued at $1,000, in one of the four draws. Entry commences on the 1st of April 2024 and will run for four months until 11:59pm AEST on the 31st of July 2024 (Entry Period). During the Entry Period, to be eligible to participate in the Competition, customers must get a quote and take out a new Insuranceline Life Insurance, Income Protection Insurance, or Funeral Insurance policy to enter the Competition. A maximum of one (1) entry into the Competition will be awarded per eligible policy. The Promotion is not open to existing customers, or customers who have cancelled a Promoter branded policy in the 12 months prior to the commencement of the Entry Period and then taken out a new Insuranceline branded policy. Each of the four Prize Draws will take place at Level 16, 1 Denison Street, North Sydney NSW 2060 on the respective Prize Draw and Time, as listed in the table in Condition 13 (and if any Redraws if there are any unclaimed prizes, Condition 19) of the full Terms and Conditions, and the winners will be sent an email and will be attempted to be notified via phone within two (2) business days of the Draw and published on https://www.insuranceline.com.au/campaigns/competition-terms. Max. retail value of the total prize pool is $20,000. To be eligible at time of the draw, customers must still have an active policy and have paid 1 month of premiums in full. View eligibility criteria and full terms and conditions here. Promoter: TAL Direct Pty Limited ABN 39 084 666 017 AFSL 243260. Permits: NSW NTP/09255, ACT TP24/00483, & SA Licence No. T24/388.

**Bonus 10% more cover is calculated on the fifth anniversary from the Policy Commencement Date. Each adult life insured will have an extra 10% of the average Funeral Insurance Cover amount held during the previous five years added to their Funeral Insurance benefit. Terms and conditions apply. Refer to the PDS for more information.

#Claims paid figures relate to all Insuranceline life insurance policies in the 2021 financial reporting year (1 April2021 to 31 March 2022). All claims on Insuranceline policies are assessed against the relevant policy terms and conditions. These terms and conditions, as well an explanation of the claims process, can be found in the applicable Product Disclosure Statement. Claims are administered and settled by the insurer, TAL Life Limited.

***Insuranceline is the longest standing provider of Funeral Insurance in Australia, based on: Strategic Insight, Actuaries & Researchers. Funeral Insurance means a policy with periodic premium payments that provides a lump sum to help pay for funeral and associated expenses when you die and excludes pre-paid Funeral Plans and Funeral Bonds.

The information provided on this website is general advice only which means it does not take into account your individual needs, objectives or financial situation. For this reason, you should consider whether it is appropriate for you, and before you decide to buy or to continue to hold an insurance product, you must read the relevant Combined Product Disclosure Statement (PDS) and the Financial Services Guide (FSG). The PDS/FSG contains important information which will help you understand the product, including what's covered and what's not covered and to decide whether it is appropriate for you. The Target Market Determination (TMD) for the relevant product, where applicable, is also available.

If you are considering cancelling a policy you already hold in order to replace it with a new policy, make sure you read the terms and conditions of both policies before you make a decision. The cover terms may be different, you may lose benefits accrued under your existing policy, and waiting periods may apply to the new policy. Changes in your personal circumstances (such as your age, health, and employment) that have occurred since your existing policy was originally taken out may also affect your new policy. As your application for a new policy may not be accepted, and some policies may be unable to be reinstated after they have been cancelled, you should consider waiting until your new policy is confirmed before you cancel any existing cover.

Promoted by Insuranceline, a trading name of TAL Direct Pty Limited (of Level 16, 363 George Street, Sydney NSW 2000) ABN 39 084 666 017 AFSL 243260. TAL Life Limited ABN 70 050 109 450 AFSL 237848 issues the life insurance benefits. St Andrew's Insurance (Australia) Pty Ltd ABN 89 075 044 656 AFSL 239649 issues the Involuntary Unemployment Cover.

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