Making Your Death Easier For Others
The costs of funerals in Australia can be very expensive with some in excess of $15,000. Paying for your funeral in advance can be an option to help make it easier for your family when you pass away. Depending on your financial situation, the following are some of the things to consider in regards to funerals and how to pay for them.
How Much Do Funerals Cost
The cost of a funeral varies depending on a number of factors. Basic cremations can be a couple thousand dollars whilst an elaborate casket, flowers and burial can cost up to $15,000 and more in some cases.
The following is a list of items that should be considered when organising a funeral.
- Funeral Director Fees
- Death Certificate
- Cemetery Plot
- Additional Expenses: Flowers, Newspaper Notices, Clergy, Celebrant and Wake
Ways To Pay For Your Funeral With Superannuation
When it comes to paying for your funeral there are different options to make it easier.
Super: If you have superannuation, upon your passing the super fund will pay out the balance of your super and any life insurances you may have held to your next of kin. This money can easily be paid out for your funeral, although in some cases it can take some time for it to be paid. In cases such as this, your family will need to pay for your funeral and then be reimbursed once the money has been granted. You can talk to your super fund for more details.
In some cases you may be eligible to have access to your super early to pay for funeral expenses if you have a terminal illness. You may also be able to pay a dependant’s funeral expenses by accessing their super early as well. For more information, visit the Department of Human Services.
Governement: In some cases, you may also be entitled to funeral payments from your territory or state governments, trade union, or Department of Veterans Affairs (DVA). You can call the DVA: Bereavement Assistance on 13 32 54. For regional callers you can phone 1800 555 254. Other bereavement payments may become available through the Department Of Human Services. You can call 13 32 00 or for TTY services call 1800 810 586.
Save For Your Funeral
Another way you can pay for your funeral is saving for it. This can be done by opening an online saving account or a term deposit and save enough money until you have reached the amount that’ll cover for the funeral you want. This is a great option for those who don’t want to take out funeral insurance. To make sure you maintain your funeral money, it’s important to keep the amount separate from your everyday accounts. It’s also important to tell your loved ones about the account and how to access it when you pass on.
Pre-paid funerals allow you to pay your funeral in advance. This is an important step for those who may want a specific type of funeral or certain features added to their funeral. If you don’t want to decide on any of the features but you want to pay for your funeral up-front, you can set it up where your loved ones can sort out the final details for you. When considering this option, you should ask about and get a copy of the full description and costs associated with your pre-paid plan so you know what you’re paying for. Funeral service operators are in breach of the Competition and Consumer Act 2010 if they don’t reveal their overall costs.
Your funeral can be prepaid by regular instalments over a set period of time or you can pay it in full. You can leave a deposit and negotiate the amount that’s left to be paid. When looking for pre-paid funerals, it’s important to shop around and compare the different packages. With anything, there are some pros and cons associated with pre-paid funerals. These include:
- The cost of your funeral is fixed with today’s dollar even if you don’t pass on for many years.
- You can control any extra features if you want to.
- You can pay off your funeral in instalments over a period of time.
- If you live for another 5-10 years, it can be a lot cheaper than funeral insurance or a funeral bond.
- If you move interstate to live with your family, your pre-paid funeral may not be easily moved. Depending on the provider some pre-paid plans may be transferrable.
- If you change your mind about having a pre-paid funeral, you may not be able to get your money back. It’s important to check for terms and conditions.
When taking out a pre-paid funeral, it’s important to check with your state as some pre-paid funerals need to be registered. You can find out more information about pre-paid funerals from your states fair trading offices. Contacting your fair trading office as soon as possible is advised when you want to take out a prepaid funeral.
Funeral bonds can help you save for funeral expenses. The funds can only be withdrawn, however, after you pass on and are to be used to pay for your funeral. Funeral bonds, pre-paid funeral plans and burial plots where money has been invested are not subject to income tests or asset tests for aged pensioners. For more details, see Centrelink’s funeral bonds and prepaid funeral page. Funeral bonds can be invested through an investment company, such as a life insurance company or directly from a funeral director. Funeral bonds may be able to be assigned to a funeral director of your choosing.
Funeral bonds can be paid in instalments but it’s important to understand all the costs which are involved before signing up. To find out more info about the product you should read the bond’s prospectus. There are a few pros and cons associated with funeral bonds. These include:
- They’re exempt from any income or asset tests which are designed for the aged pension.
- You can keep the funeral money separate from other investments and accounts.
- It’s great for those who want to pay money towards their funeral in advance but don’t want to worry about the details.
- Over time your savings will grow.
- You’re not locked into any specific funeral director.
- You can pay your funeral bond off in regular monthly instalments or pay for it upfront.
- If you pay your funeral bond off in instalments and die before the bond is paid in full, your loved ones will only receive the amount that’s been paid along with any money that’s earnt on the investment.
- Investment returns on your bond may not always keep up with an inflation in funeral costs. If you invest in a bond worth $6,000 but you pass on 10 years later when funerals average $8,000, your family needs to find the additional money to meet the difference in price.
- Won’t lock in today’s funeral cost.
- If you want to discontinue the bond you may not get your money back.
Like many other types of insurance, you have the option to pay for your funeral cover with fortnightly, monthly or weekly instalments for a fixed amount of cover. Generally, you can choose between $4,000 to $15,000 which will be paid by the insurer to your beneficiary upon death.
With funeral insurance, you’re buying insurance to cover the cost of your funeral at a later date and not saving for your funeral. With life there’s one fact and that is at some point we will all die, the only thing is we don’t know when that’ll be. This is why it’s important to think about whether you can afford to pay for funeral insurance over the next 10, 20 or 30 years.
With any insurance you’ll be making payments for many years, however with the added premiums your cover and costs will increase as you age. Premiums on funeral insurance tend to rise greatly for those over 50 years of age which cause people to cancel their policy within the first few years. This can lead them to losing any premiums that have already paid.
If your premiums start to become unaffordable, you can stop paying them but your policy will be cancelled. In cases such as this you won’t get any money you’ve paid into your policy. Different insurers offer different rules and guidelines when it comes to their polices, so read the PDS carefully before you commit to signing up.
Things To Consider
Before deciding whether to take out any funeral insurance, check first to see whether it’s well worth the money.
- Will you be eventually paying more for the insurance over time than what it will take to pay for the funeral?
- Have you considered other options associated with paying for a funeral?
- Will you be able to keep up with the rising costs of insurance premiums?
When looking to organize payment for your funeral, it’s important to think long term. Remember over time if you can’t keep up with the payments you’ll lose all the money you’ve paid into the insurance over time. Your premiums will increase and so will your cover amount. If you don’t want this to happen you can speak to your insurance provider however, sometimes they can’t stop it. Check your PDS.
- You get covered for your funeral from the first day you take out your policy. However, most polices cover accidental death within the first two years.
- Insurance may be a more affordable and familiar choice for you over paying off a funeral plan.
- Premiums will go up over time. This means that although your policy may be cheap to start with, over time it will become expensive. This is especially true if you’re living on a fixed income.
- You won’t get your premiums back that you’ve paid if you want to cancel your policy.
- If you live up to 10 years longer than when you’ve taken out your policy, you may end up paying out more than the funeral’s worth.
- Due to most insurance companies covering accidental death within the first 2 years, if you die from an irreversible illness you may not be covered. Always read the terms and conditions.
- Depending on the provider it may take a while for your insurance provider to pay out the insurance policy.
Features and Benefits
All different insurance companies offer different features and benefits. Some of the benefits and features you may come across, depending on the provider include, but aren’t limited to:
- Automatic acceptance for Australia citizens who are within a certain age bracket.
- No medicals or compliance forms to fill out.
- You get to choose your type of cover.
- You get to choose the amount of cover you want to take out.
- You gain access to quick and easy claims.
- You may not have to pay any more premiums over the age of 85.
- You may be able to take out single or joint policies.
- If you’re terminally ill, you may receive an early payout.
- You may receive a free Will kit
When Won’t Insurers Pay?
In some cases, your insurance company won’t payout in the first year if you die of:
- A sickness
- An accident which occurred prior to when your policy began.
In some cases, within the first year your premiums may be refunded if you die within this period. Ask for more information about this from your provider.
When it comes to your own funeral it can be hard to think about, however it’s important that you have something in place to pay for your funeral so your family doesn’t have to worry about it when you pass on. By taking initiative now you can easily ease the burden and pain of your passing by making sure your family members won’t have to worry about paying for your funeral.