After a personalised funeral insurance quote? Follow these simple tips to compare effectively and find the right policy
If you're after a competitive funeral insurance quote, then the best way to start is by comparing policies online. In order to successfully navigate through the sometimes overwhelming amount of choice that the internet offers, and seperate the good products from the bad, keep the following tips in mind when you compare funeral insurance quotes:
- Understand the essential funeral insurance features. Policies have features (such as premium caps) that can ensure you never pay more than what you've insured.
- Understand your personal situation. By looking at your personal situation you can get a realistic expectation of how much your funeral insurance quote will cost.
- Understand how much cover you need. Consider the costs of a funeral and decide on how much you will insure.
- Be aware of funeral insurance traps. Some funeral insurance policies can result in you paying more in total premiums than your sum insured.
- Compare policies with an adviser. By speaking to an adviser, they can assess your personal situation and help you compare quotes to suit your needs.
Compare policies currently offered by reputable providers
How much your funeral insurance will cost you depends on a range of factors such as:
- Your age. The older you are, the more you will pay.
- Your smoking status. Smokers will pay more than non-smokers.
- Your gender. Males are statistically a higher risk than females.
- The state or territory you live in. Some states are more expensive than others due to the different duties and taxes imposed.
- Your sum insured. This is the amount of cover you are applying for.
Benefits that should be standard in any funeral insurance policy you consider include:
- Guaranteed acceptance. Australian resident between 45 and 79 years of age are usually eligible.
- No medical underwriting. Your general health and pre-existing medical conditions should not be a factor (as opposed to life insurance).
- Range of cover. There should be a range of benefit amounts to choose from, usually between $5,000 and $30,000.
- Capped premiums. Your premiums should be free once you have paid the equivalent of the sum insured or you reach a certain age (often 90).
- A choice of stepped or level premiums. Stepped premiums increase with age, so level (fixed) premiums are usually the better option.
- Cooling-off period. There should be a suitable period (usually 30 days) in which you can change your mind and receive a full refund.
- Accidental death. Your premiums should be refunded if you die due to an accident in the first 12 months.
- Global coverage. You should be covered 24/7 anywhere in the world.
As well as the standard benefits, you should look for additional features offered by some insurers. These can include:
- Policy discounts. Many insurers offer a discount on your premium if you take out a certain amount of cover (e.g. 10% for $20,000), or take out a joint policy with your partner (up to 20%). Some insurers also offer a 10% discount for every three years you maintain your policy.
- Early payment option. Some insurers will pay the full benefit amount before you die if you are diagnosed with a terminal illness.
- Premium pause option. Your payments can be frozen for three months if you are experiencing financial difficulties.
- Flexible payment. Many insurers allow you to pay fortnightly or monthly without incurring an administration fee.
- Free will kit. Some insurers also include a free legal will kit with your policy to help you get your affairs in order.
It's a good idea to calculate how much cover you actually need before you try to get a quote.
Calculating your sum insured will come down to how much you are planning to spend on the service. As everyones individual requirements are different, it's hard to give a general amount. Instead, you can use the following factors as a guideline for determining how much you think you will need to insure for.
Average costs of a funeral in Australia
The cost of a cremation is around $4,000 while a more elaborate service can cost anywhere upwards of $20,000. The amount of cover you opt for will depend on your budget and the type of funeral you want.
Additional expenses can arise if your funeral is subject to religious, cultural or family requirements.
What makes up the cost of a funeral?
Funeral costs can include things such as:
- A casket
- A burial plot
- Funeral director fees
- Newspaper notices
- Death certificate
- Special costs
When comparing quotes, it’s important to keep these potential risks in mind:
- Policies without caps. If the premiums aren’t capped after a certain amount or age, you could end up paying much more than the cost of your funeral.
- Comparing just the price. If you choose a policy based purely on price, you could end up being underinsured.
- Policies that cancel without a grace period. If your policy does not have a premium pause option, your policy could be cancelled if you fall behind with payments and your previous contributions may be forfeited.
- Choosing a stepped premium without understanding what it is.Choosing a stepped rather than level premium when you are on a low fixed income to prevent your payments from becoming unaffordable later in life.