Family funeral insurance

Family funeral insurance can ensure your loved-ones have one less thing to worry about when you and other immediate family members pass away. Going a step further than a single policy, family cover can provide your children or siblings with a lump sum payment to cover your funeral, your spouse's funeral and an elderly parent's funeral.

If you purchase a family policy, you can also get as much as 20% off your premiums when other family members purchase additional policies. Children under 21 can sometimes be bundled onto a policy as well.

What are the benefits of taking out funeral insurance as a family?

• Family discounts. The main advantage of taking out family funeral insurance is that many insurers offer a discount (as much as 20% off your premiums) when immediate family members (e.g. your spouse) purchases additional policies with them.
• Convenience. There is also the convenience of having all policies under one provider, with one point of contact for payment and claims.
• Standard funeral insurance benefits. Family policies will include the key funeral insurance features you'd expect to find.

What features can my family access in a funeral insurance policy?

The key features of funeral insurance include:

• No medical examinations (If under the age of 75 for most policies)
• Fast and simple application
• Lump-sum payout of your choosing
• Accidental death cover in the first 12 months
• Choice of stepped or levelled premiums

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Can I buy funeral insurance on behalf of a family member?

If a family member such as an elderly parent is unable to apply for funeral insurance themselves, it is possible to take out a policy on their behalf. You can even pay their premiums for them if they do not have the means to do so. As long as their name is on the policy as the insured person, they will be the policy owner and the cover will apply to their funeral expenses, regardless of who pays the premiums.

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How do I raise the issue of funeral insurance with an elder?

Discussing funeral insurance with a sick or elderly family member can be awkward and how you go about it will depend on your individual situation and how your family normally deals with sensitive issues.

• Focus on how your family member wishes to be remembered, before focusing on funeral costs. If they realise that your primary motivation is to ensure they receive the kind of send off they want and deserve, they are more likely to be receptive to such a conversation and you can even use your own funeral insurance policy as a way of demonstrating the merits of planning ahead.
• Suggest visiting a funeral director or an online funeral resource. Once they have agreed that it is a good idea in principle, you can suggest visiting a funeral director or if that’s not possible, browsing funeral sites together online. That way they can see for themselves the costs involved in a typical funeral and will realise the financial necessity for funeral insurance.

The costs of a funeral

The costs of a funeral can be substantial. The price of a basic cremation is around $4,000 and if you choose to be buried, costs escalate from there including the cost of a funeral director, funeral service, casket, burial plot, grave stone, flowers, transportation, after-service catering, newspaper notices and death certificate.

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Can I get funeral insurance for a relative if I’m worried about them falling ill?

Yes, you can get funeral insurance for this reason. One of the advantages of funeral insurance is that no medical checks are usually required in order to obtain cover. Once you reach a certain age however, this may not be the case and obtaining cover can become more difficult. The typical eligible age range is 45 to 70 years old, although this varies with insurers and someone up to the age of 80 may still be able to get cover, subject to medical assessment.

Pre-existing medical conditions

If someone has a pre-existing medical condition (one that developed before taking out the policy), most insurers will not pay the benefit if they die from that condition, unless it was disclosed at the time of taking out the policy and the insurer had agreed to cover it.

Make sure you're aware of 12 month waiting periods

Most insurers will also not pay a benefit if the insured passes away due to illness or develops a terminal illness from before or within the first 12 months of the policy’s life. A terminal illness is a diagnosed illness where life expectancy is not greater than 12 months, regardless of available treatments.

What happens if my family member falls ill or passes away during the waiting period

Nevertheless, many insurers will refund the premiums paid in such circumstances and there are now those who offer an early payment option for terminal illnesses (providing they aren’t pre-existing), so it pays to shop around for the policy that best suits your family member’s circumstances.

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How do I make sure my family gets the right funeral insurance?

The best way to compare funeral insurance policies is to use an online comparison site such as finder.com.au. This will allow you to compare quotes from various insurers, read product reviews, learn the traps to avoid. Some things you should look out for include:

• Age restrictions. Find a policy with an eligibility age range that includes your family member
• Funeral insurance rip offs. Avoid funeral insurance policies that result in you paying more than your sum insured. You can avoid this with premium guarantees.
• Badly explained policies. Beware of poorly explained policies that are not clear on your payment structure e.g. policies where you end up paying more per year as you age.
• Policies without grace periods. If you're unable to pay your premiums, make sure your policy offers a grace period to reinstate your policy. Without a grace period, you'll loose what you have paid in premiums.

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Frequently asked questions

• How much are premiums for funeral insurance?

  The cost of funeral insurance varies based on factors such as your age, gender and where you live. Finder research has found a 50-year-old looking to get $8,000 worth of cover, may find premiums for under $11 a week on average.

• What is the difference between life insurance and funeral insurance?

  Life insurance is a far more comprehensive form of insurance (in fact, it also includes a funeral expenses payout as one of its features). Life insurance pays a benefit of up to $25 million in the event you die or are diagnosed with an incurable illness while you hold a policy. It can also include benefits such as TPD cover and critical illness insurance. Funeral insurance offers a comparatively small lump sum (of up to $25,000) that gets paid out on your passing.

• At what age should I consider funeral insurance?

  It's up to you to decide. The product is generally geared up to older people – that's why you'll often see providers in Australia offering cover only to those aged above 40 and under 80.