Finding the right funeral insurance provider in Australia.
Funeral Insurance can provide great support for families at an extremely difficult time by providing a lump sum payment to cover the costs of a loved ones funeral following their passing. The final cost of a funeral can often come as quite a shock to families with funerals in Australia ranging anywhere from $5,000-$30,000.
What expenses need to be covered?
- Burial Plot
- Grave Marker
- Hearse and Other vehicles
- Digging and filling of grave
- Driving costs
Key reasons to take out cover from a funeral insurance company
There are a number of factors that make funeral insurance worth considering;
- Saves family the financial hassle of getting money together at a time that can already be quite stressful.
- Enables policyholders to have the funeral of their choice. Know in advance where they will be buried and the type of service they will receive.
- Can help reduce the impact of mounting costs. A plan is in place and it can be carried out without having to secure more and more funds.
- There can be issues and delays receiving funds that are held in bank accounts if the account is in the name of the deceased.
What to look for in a funeral insurance company
Funeral Insurance in Australia is offered from a range of different providers including life insurance companies, general insurance companies and friendly societies. There are some key steps to take to compare different companies when finding an appropriate policy for your situation.
1. Consider their reputation. It is no secret that much of an insurance companies success is built on the reputation that is built from their past clients. Applicants should take the time to read up on the company and the experience that other people have had with them in the past. Consider the companies financial strength and if there is any chance of them going bankrupt over the course of your policy.
There are many different websites and forums online that can give testimonials of how people found their service and if there was any issues over the course of their policy. It’s important to take each review with a grain of salt and not let your decision be swayed by the odd negative comment. Some important points to look out for;
- The companies application process.
- Service provided during application and over life of policy.
- Ability to review policy as situation changes. Was there much flexibility working with this provider?
- Ongoing support when needed? Could they be reached at ease.
- Experience at claim time. Was the process straightforward?
2. Policies on Offer: Consider the companies range of policies and if they are suitable for your need. This will be more straightforward when looking for funeral cover but it is still important to consider how the policy is structured. Things to consider:
- Waiting Period after claim is made
- Conditions for claim. What events are not covered
- Ability to increase sum-insured at different stages?
- How are premium payments structured. Is there flexibility in how the cover is paid for
- Features and additional benefits on policy
3. Claims Process: Its important to get an idea of a company's claim process before applying. Most companies will outline their claims process for applicants on their website or in the product disclosure statement. It is important to consider:
- Documentation required in the event of a claim
- How are claims forms provided
- Deadlines for submission of claim forms and other documentation
- Length of time expected for claim to be paid
- Claim department contact details provided?
What to look out forwhen comparing policies from different companies
Am I going to end up paying more in the long run?
It is crucial that all applicants assess what they are actually going to end up paying in premium payments over the life of their policy. A study by Rice Warner conducted in September 2010 found one case where a policyholder could expect to pay $85,099 in premiums for a $6,000 funeral if the cover was taken out over a period of 30 years (The Australian, 2012). What's more, some plans will actually discount previous premium payments that have been made if the policyholder misses a single payment.
One way around this is to find plans that will cap premium payments at a certain age to avoid paying excess. For example, if you were to take out $8,000 in cover at the age of 60 and premium payments stopped at age 65 you may only pay $5,000 in premium payments.
Other policies will only require the policyholder to pay premium payments until they have reached the sum-insured, ensuring no more is paid then the insured would have paid in the first place.
Key features on plans worth considering
- No Medical Underwriting: Most policies will not require any medical underwriting.
- Cover Continues after Expiry Date: Most policies will cap premium payments at the age of 90. Important to find a policy that will continue to provide cover after this date.
- Worldwide Cover: Ensure you are covered 24 hours a day anywhere in the world.
- Accidental Death Cover in First 12 Months: Most policies will only offer a benefit payment if the cause of death in the first 12 months has been accidental.
- Refund for Death Within First 12 Months: Some policies will provide a refund of the premium payments made in the first 12 months if cause of death is not due to accident or a self-inflicted injury.
- Cooling Off Period: Most policies will offer a cooling off period of about 30 days after the application has been signed.
- Ability to Cap Premiums: As stated previously, the ability to cap premium payments can ensure that the policyholder does not pay more than what is necessary for their cover.
- Premium Waiver: Some policies will waive premiums during times of financial hardship.
Who might consider taking out funeral insurance?
Funeral Insurance can be a good option for people in their later years where life insurance may not be as viable an option. They may not have many financial obligations to take care of and are simply looking to ensure there is a financial safety net in place in the event of their death.
Funeral insurance can also be a viable option for people that have struggled in the past to be accepted for life cover due to the level of risk they carry to providers. Most funeral insurance policies do not require applicants to undertake any medical underwriting.
Conclusion: Know exactly what you are signing up for when taking out funeral cover
It is crucial that anyone taking out funeral cover takes the time to assess their own situation and the different options available from providers before signing up for a policy. It is of utmost importance to determine how much you could potentially end up paying over the life of the policy and if possible find a policy that will cap premium payments once they have reached the sum-insured.