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:
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: take out funeral insurance; pre-pay with a lump sum or regular instalments; or buy funeral bonds. Let’s take a 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 will increase as you get older. With Insuranceline, as long as you don’t make any changes to your cover, your premium won’t go up just because you get older².
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. Some insurance companies can take a while to pay a claim. You really shouldn’t have to wait long and with Insuranceline, you’ll generally receive a pay out 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 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. Insuranceline’s Value Promise means that after you've held the cover for 12 months, and when the time comes to claim, your beneficiary/ies will receive the Funeral Insurance Benefit – plus any applicable Bonus Cover – or the total premiums paid for Funeral Insurance, whichever is higher.
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.
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 up front. 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 interstate or want to change your funeral plans later on – 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 – read the bond's prospectus carefully before you make a decision. 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.
Read more about Funeral Insurance from Insuranceline or call us on 13 77 87 and we’ll be happy to answer all of your questions.