We look at the most commonly asked questions about funeral insurance to help you better understand what’s covered.
If you’re considering funeral insurance and whether it’s right for you, you no doubt have some questions you need answered. Here we answer some common questions about funeral insurance and what it covers.
1. Why should I consider funeral insurance?
If your family members do not have sufficient savings to pay for your funeral, or if you have not pre-paid for your funeral, then you could consider funeral insurance. According to Moneysmart funerals can cost anywhere between $4,000 and $15,000 depending on what’s involved. While there are ways to reduce this, finder.com.au recently found that the average funeral cost in Australia is just under $7,500. Taking out funeral insurance can help cover the costs so your family can focus on what’s important.
2. What are the advantages of taking out funeral insurance?
Funeral insurance can help cover some, if not all, of the funeral costs, especially as you choose the amount you’ll be insured for. The lump sum is usually paid out within 24 hours of lodging a completed claim, which means loved ones won’t be scrambling to cover costs. So one advantage of taking out funeral cover – peace of mind for you and your loved ones.
3. What should I look for in funeral insurance?
There are a range of funeral insurance policies so it’s a good idea to find one that suits your needs. It’s also important to weigh up the costs - will you be paying more over the years in premiums than your funeral will actually cost? It’s important to think long-term, especially in terms of whether you’ll be able to keep up with the cost as the years go by.
It’s also a good idea to assess how your premiums will work and whether there are any added extras such as bonus cover after a certain number of years or the ability to cash in your policy after a certain age.
4. How do premiums work?
Premiums are generally either stepped or level. Stepped premiums are recalculated every year, so as you age your premiums will usually rise. Level premiums, while more expensive at the outset, are based on your age at the time you take out the policy and do not rise each year unless the defined premium rates rise. This depends on your policy, and there are some providers that don’t increase premiums just because you’re getting older, so it’s well-worth having a careful look at the premium options.
5. How is funeral protection different from pre-paid funeral plans?
There are different ways you can pay for your funeral, which is why some people don’t take out funeral insurance. It really is a question of what works best for you.
Some ways to pay include leaving a lump sum with your family, pre-pay via a funeral plan or take out funeral insurance. A funeral plan allows you to prepay for your funeral ahead of time. This can lock in the funeral costs at the current prices, meaning your family may not be faced with any kind of bill upon your passing. It can also help by allowing you to decide exactly how you want your funeral to be conducted.
Finally, the cover amount for funeral insurance doesn’t necessarily need to be used on your funeral. Part can be used to cover the funeral expenses and the rest can be used to pay down any debts that may be left, cover any outstanding medical bills or even used to pay for a loved one to travel to the funeral.
Of course, there are plenty of other questions relating to funeral insurance, so why not give us a call or visit our website for more information.