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The last thing you want to do is leave your loved ones with a financial burden when you pass away. That’s why funeral insurance is a sound investment for many Australians, as it helps your grieving family cope with the immediate financial expenses that come with organising your funeral.
There are several factors that influence the cost of funeral insurance. They include:
Figures are based on Australian Securities & Investments Commission's 2015 study.
There are two main ways you can pay for funeral insurance.
Some funeral insurance plans will increase your sum insured each to cater to the cost of inflation. This will increase your premium (regardless of whether it is stepped or levelled) as well, unless you choose to decline this benefit.
Funerals are far from a minor expense. In fact, many people are surprised to find just how much it costs to farewell a loved one. According to MoneySmart, even a basic cremation service will cost around $4,000, while an elaborate memorial service with a casket, burial and flower displays could set your loved ones back $15,000.
When arranging a funeral, some of the costs you need to consider include:
The exact amount you will end up paying for funeral insurance varies from one policy to the next. For example, under some policies, if you take out cover when you turn 60 and keep paying premiums until you pass away at the age of 85, you may have forked out enough in premium payments to cover more than the cost of your funeral.
To ensure that you don’t end up paying any more for funeral insurance than you should, there are a few key policy features to keep an eye out for when choosing cover.
Just like any other form of life insurance, the main benefit of funeral insurance is the peace of mind and security that comes with knowing that your passing won’t be a financial burden on your loved ones. It also means they can afford to give you an appropriate farewell.
Funeral insurance has many other benefits. For example, funeral insurance policies often have automatic acceptance, which means that people who may not be eligible for a life insurance policy can take out some form of financial protection.
You can arrange an affordable premium payment plan to suit your budget, and there may also be additional cover available if you die as the result of an accident.
If you have life insurance cover in place, your loved ones may be able to use the lump-sum benefit they receive when you die to help cover the cost of your funeral. If this is the case, you’ll need to remember to factor in funeral costs when calculating your sum insured.
There are also many modern life insurance policies that include a funeral advance benefit. Upon your death, these policies offer a prompt payment (for example $10,000 or $15,000) to help your beneficiaries cope with the expenses that immediately arise following your death such as your funeral. This is a common inclusion on many life insurance policies, so check the terms and conditions of your life cover policy.
