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Before you sign up to a funeral insurance policy, you'll need to make sure funeral insurance is right for you and, if you think it is, make sure you're getting the most value for your money. A simple way to find affordable funeral insurance is to:
When you're comparing policies, look for discounts that can help you reduce the cost of cover. Depending on the insurer, these might include:
You should never use price as your sole selection criteria when you’re comparing policies for the following reasons:
Just because a policy is cheap doesn’t mean it contains all the benefits you need such as continuation of cover, global coverage, guaranteed renewability and refund of premiums if you die within the first year.
A cheap premium won't always stay cheap. Cheaper premiums are usually stepped, which means it will rise as you age and what seems like a bargain now could turn out to be unaffordable in a few years time. Remember if you don’t keep up your payments or cancel your policy, all the money you have paid towards your funeral insurance policy is forfeited.
Rather than just price, it's a good idea to consider long-term affordability. Look for a policy that offers fixed premium payments so you can factor them into your budget over the long term.
Fixed premiums are commonly known as levelled premiums, where your premiums remain fixed for the life of the policy. This is opposed to a stepped premium plan, where premiums increase with age.
|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.
Several policy features have been introduced by the funeral insurance industry to reduce the amount of consumers who were either getting scammed, or paying for more cover than they needed. Two ones to look out for are:
Capped premiums can help you avoid paying for more insurance than you actually need. This is how it works:
Finding a policy with a premium cap is one of the best ways to ensure you get value out of your funeral insurance policy.
Another good way to avoid a funeral insurance rip-off is to find a policy that offers a payout guarantee. This feature ensures that your dependents receive the higher benefit amount between:
Along with the knowledge that your premiums are capped, a payout guarantee gives you peace of mind knowing that you will always be able to afford your funeral insurance.
Funeral insurance can be an attractive option for those wishing to pay for their own funeral expenses. You can get instant cover over the phone without the need for medical examinations or a lump-sum payment, and the premiums can be relatively affordable.
However, keep these points in mind:
At the end of the day, it is important to both understand how to find good valued policies and to assess all your options before settling for a funeral insurance policy.
If you don’t want funeral insurance, there are other options available. These include:
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