Funeral insurance can help your family out during a difficult time.
Funeral insurance provides a nominated person (e.g. your spouse) with the financial ability to cover your funeral expenses when you are no longer around. Some policies offer up to a $15,000 benefit.
Funeral insurance is not the right choice for everyone. Always consider your own financial and personal situation when selecting products to fund your funeral. Funeral insurance does not provide funeral, burial or cremation services. Instead, it provides a sum of money to cover these expenses.
Comparison of funeral insurance in Australia
- Insuranceline Funeral Insurance: Offers a benefit payment of $15,000. Guaranteed acceptance age: 21-80 years old
- Medibank Funeral Insurance: Offers a benefit payment of $15,000. Guaranteed acceptance age: 18-79 years old
- Real Guaranteed Funeral Insurance Flexi Plus: Offers a benefit payment of $15,000. Guaranteed acceptance age: 18-79 years old
- Guardian Platinum Funeral Insurance: Offers a benefit payment of $15,000. Guaranteed acceptance age: 18-75 years old
- Seniors Funeral Insurance Top Cover: Offers a benefit payment of $15,000. Guaranteed acceptance age: 18-79 years old
- AIA MaxLife Final Expenses: Offers a benefit payment of $15,000 Guaranteed acceptance age: 18-70 years old
- ANZ Funeral Insurance: Offers a benefit payment of $15,000. Guaranteed acceptance age: 50-70 years old
Note that these are not all the brands available in Australia; only the brands that Finder works with.
Some criteria you'll need to meet includes:
- Passing away or developing a terminal illness
- The death or illness not happening in the first 12 months of holding a policy.
- The cause of your death or illness being accidental (if in the first 12 months)
Payout comparison: Here's how few different brands set their rules.
|Policy||First 12 months||After 12 months|
|Real Funeral Flexi Plus||
|InsuranceLine Funeral Insurance||
*Data last confirmed on April 26 2018. A 12 month waiting period is the standard waiting period in most policies however this can vary depending on the policy. Always check with your insurer for exact conditions.
Funeral insurance is important to ensure your loved ones are not left with a financial burden when you pass away. Most funeral insurance plans in Australia offer a range of benefits as standard, including:
1. Fast, simple application process. Funeral insurance is designed to be straightforward so you can apply quickly.
2. Flexibility in the way you pay. Funeral insurance offers features that can help you control how much you'll pay for your insurance and how you will pay.
3. Payout benefits. Funeral insurance offers various benefits in the way it pays out to your family.
4. Features that look out for you. Many funeral insurance policies now have certain features to help you get the most value out of your policy and protect your from being ripped off.
Depending on the insurer, additional benefits are also offered with funeral insurance such as:
How does this work?
||You can receive a 20% discount on premiums if you and your partner takes out a joint policy.|
||Some policies give you the option to receive 10% of your premiums back for every 3 years you remain covered.|
||Some policies give you the option to automatically increase the amount covered, to keep up with inflation. This option is typically a 5% increase per year and will also increase your premium paid.|
||Some policies include a free legal will kit when you take out a policy.|
Funeral insurance is designed to provide your dependants with a lump sum payment in the event of your death. This payment can be used to cover the different types of funeral costs, including:
The cost of your funeral insurance will depend on a range of factors including:
- Sum insured. This is the amount you originally agree to insure. Most policies can go up to $15,000.
- Age of the insured person. The older the person is at application, the higher the premiums will generally be.
- Whether or not the applicant smokes. Smokers will have a higher premium.
- Gender. Women tend to have a greater life expectancy than men, and hence cheaper premiums.
- Applicants State or Territory. Government fees to insurers may differ from state to state. This is passed onto your premium.
The average annual cost of premiums by age group
Figures are based on Australian Securities & Investments Commission's 2015 study of the funeral insurance sector.
To get a more accurate idea of how much funeral insurance will cost you, get a personalised quote
As with other forms of insurance, funeral insurance plans often include the option of stepped or level premiums.
- Stepped premiums. Your premium is based on your age, your sex and the sum insured and is then recalculated every birthday, becoming progressively more expensive the older you get.
- Level premiums. Your premium is also based on your age, your sex and the sum insured, but you are insured for an agreed amount and your premium remains the same for the life of the policy (apart from yearly CPI increases).
|Time holding the policy||Stepped premium||Level premium|
|0 - 3 years||$320||$400|
|3 - 6 years||$360||$400|
|6 - 9 years||$410||$400|
|9 - 12 years||$500||$400|
These figures are made for illustrative purposes only. The actual cost of your premium will depend on your policy and other factors including your age and sex.
So which one is right for me?
The advantage of stepped premiums is that you pay less at the beginning of your cover, while the advantage of level premiums is that you always know roughly what your premium will be and can budget accordingly. The option you choose on whether or not you expect your income to increase over time.
To get a better understanding, you can read more about funeral insurance premiums here.
Make sure you steer clear of these traps
While funeral insurance has a lot of benefits and is easy to obtain compared with other forms of insurance, there are some traps to be wary of when applying for cover. These include:
- Buying a policy without comparing. Customers can find themselves buying bad policy after seeing a television ad or after being cold called for funeral insurance. Make sure you understand the policy and how it compares with its peers before buying. Remember, you're entitled to cooling off rights, which means you can cancel a policy for any reason within 30 business days.
- Paying more in premiums than a funeral would cost. Avoid this by looking for policies that offer capped premiums once the sum insured is reached or a guaranteed payout.
- Buying the cheapest policy. You could find yourself underinsured if a cheap policy doesn’t contain the basic benefits listed above.
- Not checking the length of the cooling-off period. If you change your mind about buying a policy and wait too long before notifying the insurer, you may not be able to get a refund.
- Not being aware that premiums rise over time. Premiums and benefits increase over time to keep pace with inflation. If you’re on a fixed income, this needs to be factored into your budget or your funeral insurance could become unaffordable.
- Levelled premiums that rise with inflation. Although this means your sum insured may rise with inflation as well, this can be an unaffordable cost for some. Check with your insurer to see if your sum insured is automatically increased.
Funeral insurance has come under scrutiny in recent years, due to the long term cost of some premiums being greater than the cost of a funeral itself. Steps have since been taken to make funeral insurance a more transparent product.
When you apply for funeral insurance you should always look for a value guarantee feature. This will ensure that you never pay more than what you insured at the start. Here are two types to look out for
A guaranteed payout means that you'll be paid out the greater amount between your premiums paid and the sum you originally insured.
Premium caps ensure that your premiums are stopped once they reach the sum you originally insured.
3. Flat premiums (levelled premiums).
Premiums that never go up during the life of the policy.
4. A grace period
If your policy is cancelled due to an inability to make premium payments, you're given grace period where your policy can be reinstated e.g. 3 months.
5. 'Paid up' insurance clause
If your policy is cancelled due to an inability to make payments but you have held the policy for at least 10 years, the policy will become a 'paid up insurance' product. This means that you can receive a percentage of the sum insured e.g. 40% of $15,000, and premiums are no longer payable.
6. Premium discounts
You can receive a premium discount after a certain period of coverage, specified by the policy e.g. 5 years
If you’re unsure about whether you want or can afford funeral insurance, there are other funeral payment options you can explore.
- Prepaid funeral. This is where you pay for your funeral upfront so the funds are there when needed.
- Funeral bond. .This is where you pay in a lump sum or by instalments and have your money invested by an insurance company or friendly society
- Super or life insurance. This is where you have life insurance or life insurance through your superannuation that provides cover for funeral expenses
- Savings account. This where you put your money into an account regularly to save for your funeral expenses.
Breakdown of my options
|Super or life insurance||
If you can no longer pay for your funeral insurance
If you think you might not be able to pay premiums, speak to your insurer as soon as possible. Some policies provide a grace period (of up to 3 months) where you're still covered for accidental deaths.