How much does funeral insurance cost?

How much does funeral insurance cost in Australia?

The cost of funeral insurance varies widely based on several factors, including your age, how much cover you choose, the type of premiums you opt for, and which brand you buy your policy from. Our research shows monthly premiums for a policy with a $10,000 benefit range from roughly $55 to $150 a month.

What affects the cost of funeral insurance?

Several factors affect the cost of funeral insurance, including:

• Age: If you take out a policy at 50, it will be cheaper than taking one out at 60.
• Benefit amount: The higher the eventual pay-out, the more you'll pay in premiums.
• Lifestyle: If you engage in activities deemed high-risk, such as smoking, you may pay more.
• Profession: If you work in a high-risk job or industry, your cover may cost more.
• Premium Type: The type of premium you choose will also affect the cost.

How do payments for funeral insurance work?

There are three types of premium for funeral insurance - stepped, level, and capped.

• Stepped: Start low but increase with age, potentially becoming unaffordable.
• Level: Stay around the same price throughout the policy, but may start higher.
• Capped: Once you've covered the sum insured, you won't have to pay any extra.

Regardless of how you pay for your funeral insurance, the eventual benefit is always paid out the same. A lump-sum is given to your nominated beneficiary upon your death. While most people intend funeral insurance to cover the cost of their funeral, your beneficiary can spend the money however they choose.

What are funeral insurance guarantees?

Some funeral insurance brands offer a guarantee that you will receive either your sum insured, or the total premiums you paid, whichever is greater. These types of guarantee ensure your policy is offering good value for money, and should be considered.

Is funeral insurance worth it?

Our cost research shows the average annual cost of a $10,000 funeral insurance policy is $1,009. The average cost of a funeral is between $4,000 and $15,000.

It's possible that, if you saved the money you would spend on premiums, you could save up enough to cover a funeral in just a few years. But it's impossible to know if you'll die before you have the opportunity to save up enough.

In some cases, you may end up having a funeral insurance policy for decades, and you may pay more into the policy than you need for a funeral. This is why looking for a value guarantee is important, as you can be assured your family will at least receive the amount you paid in.

Alternatives to funeral insurance

• Prepaid funeral plans: Work with a funeral director to arrange and pay for your funeral ahead of time. This means you can lock in your funeral for today's prices, and have a say on your final farewell. Prepaid funerals are excluded from income and asset testing but, if you move out of the funeral director's service area, they may not be required to honour your contract.
• Funeral bonds: An investment offered by a friendly society or life insurer that allows you to set aside money to cover your funeral costs. The investment is intended to grow in value and is paid out to your nominated person when you die. It can't be accessed before your death.
• Savings accounts: Saving independently for your funeral is the most flexible approach if you're able to consistently set money aside to cover expenses.

FAQs

• How much is funeral insurance per week in Australia?

  Our research shows a $10,000 funeral insurance policy cost between $55-$150 a month, depending on several factors.

• What are the disadvantages of funeral insurance?

  Stepped premiums may become unaffordable as you age but, in most cases, if you cancel your policy, you won't receive any of the money back. In some cases, you may end up paying more into the policy that you would have spent on a funeral.

Written by

Nicola Middlemiss

Journalist

Nicola Middlemiss is a journalist with nearly a decade of experience in personal finance and insurance. She has contributed to Domain, Yahoo Finance, Money Magazine and Insurance Business Australia, offering in-depth insights into commercial insurance in the Australian market. Nicola holds a Bachelor’s degree in English from the University of Leeds and a Tier 1 General Insurance (General Advice) certification, which complies with ASIC standards. See full bio

Nicola's expertise

Nicola has written 257 Finder guides across topics including:

• Personal finance
• Personal insurance, including car, health, home, life, pet and travel insurance
• Commercial business insurance