There are a few different ways to pay for a funeral and we've explained some of them here.
When you’re getting on with life, thinking about your funeral expenses is probably the last thing on your mind. Yet you may be surprised to learn how much the average funeral costs these days. Even the most modest service can be expensive, starting from $4,000 for the essentials up to $15,000¹ for something more elaborate. It’s not so surprising when you consider all the different elements that may need to be arranged:
- Service (chapel or venue hire)
- Funeral director’s fees
- Crematorium costs or burial plot
- Memorial booklet
That’s before you start thinking about the kind of wake you’d like, which can be anything from a few drinks at the local to a big affair requiring a venue, catering, and an event organiser. Sorting out your funeral expenses in advance is just another great thing you can do for your loved ones. If you want to make it easier for them, you have several options: some of these include taking out Funeral Insurance; pre-paying your funeral with a lump sum or regular instalments; or buying funeral bonds. Let’s look at how these different options can work:
Funeral Insurance is one way to ensure your funeral can be paid for. Like other types of insurance, you pay regular premiums (ongoing payments) for a fixed amount of cover (usually between $1,000 and $15,000). The cover amount is paid to your beneficiary (the person you want the money to go to) when you die.
Funeral Insurance policies can vary a lot between providers, so it’s important to find out as much as possible about the plan you’re considering before you sign up. This can be a bit of a minefield if you are new to the whole thing. When researching Funeral Insurance, there are a few important questions you should ask your insurer.
Find out if the premiums (regular payments) will increase over time
With some insurance companies, your premiums may increase each year as you get older. With Insuranceline, the cost is based on your age when cover starts, and generally stays the same from year-to-year, even as you get older. It will change if you make changes to your Policy, such as increasing the Cover Amount, adding optional benefits, or adding other people to your Policy. The premium will also change if we change the premium rates for our Funeral Insurance portfolio. If we change the premium rates, we will provide you with at least 30 days' notice.
Check to see how long the insurance payout will take to come through if you need to claim
Depending on what is required to make a claim, an insurance payout could be delayed. You really shouldn’t have to wait long and with Insuranceline, you’ll generally receive a payout within 24 hours of sending in a complete, valid claim.
Can I change my mind once I’ve purchased a policy?
You should always be able to feel comfortable with your decision and a cooling-off period is something all insurers have to offer. Some insurers may offer 14 days but at Insuranceline you’ll have the time you need to make extra sure you want to continue with the policy with a 30-day cooling-off period.
Is it possible that I’ll pay more in premiums than will be paid out at claim time?
With many insurance products, it’s possible that you may pay more in premiums than you are covered for. 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.+
What if I cancel my cover?
Many Funeral Insurance policies will generally work like other insurances, which means that if no claim is made, or if you cancel your cover before a claim is made or you are able to cash in your policy, you may not get anything back. Because of this, it is important to consider the long-term affordability of any cover you take out, to make sure it is a suitable product for the long run. It's important to remember that insurance is not the same as—or a substitute for—saving money, and that depending on how long you live for, you might need to pay premiums for a long time.
Insuranceline offers a 30-day money-back guarantee (Cooling-Off Period) from the date you purchase your Policy, giving you time to go over your Policy and make sure it’s the right one for you.
There are no hidden catches—cancel your Policy within 30 days of the Policy Commencement Date and you’ll get a full refund, provided you have not made a claim under the Policy. If you do cancel your Policy after 30 days, you may not receive your money back. Funeral Insurance works like your car and home insurance—it’s not a savings plan and has no cash value.
We also offer an Early Payout Option. 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.#
With a pre-paid funeral, you can plan and pay for your funeral in advance and lock in the cost at today’s prices. You can also choose to pay up front and leave the details of the funeral service for your family to decide on later.
There are usually two payment options—either pay in full with a lump sum or pay in instalments. If paying in instalments, an initial payment may be required upfront. It’s best to shop around as funeral directors offer different packages—ask for a full description of the costs to see exactly what you are paying for.
The downside is that it may be difficult if you move away or interstate or want to change your funeral plans later—check if you can transfer before you sign up.
A funeral bond is another way you can help meet the costs of your funeral. Funeral bonds are like an investment that can only be withdrawn after your death. You can invest in a bond either directly through an investment company or from a funeral director.
The bond you pay is an investment towards the cost of your funeral, but doesn’t guarantee against rising funeral prices, so it may need to be topped up by your family. If you need, you can usually pay for the funeral bond in instalments, but make sure you understand all the costs and read the bond's prospectus carefully before you decide. The good news is that money invested in a funeral bond is not subject to the asset or income test for the Age Pension if certain conditions are met.
There are also other options
Funeral Insurance, pre-paid funerals, and funeral bonds are not the only ways you can help your loved ones to be financially prepared for your funeral. You can also put aside money for funeral expenses, such as by setting aside a lump sum or saving smaller amounts regularly.
Make sure you understand any steps your loved ones will need to take to access this money when you pass away, and discuss these with them, so they will know what to do when the time comes.
Not many people like thinking about their own funeral but if you do want to sort it out in advance, there are several options so make sure you check them all out carefully and decide what the best one is for you.
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. 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.
1 Source: Paying for your funeral - Moneysmart.gov.au. Costs are estimates only and vary depending on state, and the services and features chosen.