Looking for funeral insurance but not sure where to start? Key tips to compare reviews and find suitable cover for your needs
While the funeral insurance industry has made large strides in recent years to provide better value to customers and reduce scams, it can still be understandably daunting when confronted with the vast array of products and reviews you find online.
This article aims to arm you with the knowledge required to delve into funeral insurance reviews with confidence by giving advice on how to:
- Decide how much cover you'll need
- Look for a policy with key features
- Avoid funeral insurance traps
- Read product reviews
- Compare quotes
How this article can help you review funeral insurance
- How much cover do I need?
- What are some key policy features to look for?
- What funeral insurance mistakes do people commonly make?
- Is there anything else I should consider when reviewing a policy?
- Where can I find online reviews of funeral insurance products?
- Are there any red flags to look out for when it comes to reviews?
- Is there any alternatives to funeral insurance?
Many Australians get a nasty shock when they discover just how much it can cost to pay for a funeral. According to MoneySmart, overall expenses range from $4,000 for a basic cremation right through to $15,000 for more elaborate services.
Of course, the total cost will vary depending on your own requests and the wishes of your loved ones, but some of the costs you’ll need to consider include:
- Caskets and urns. The cost of an urn can go up to $200.
- Cremations. The cost of cremation is typically around $1,100.
- Gravestones. The cost of a gravestone can go up to $2,000.
- Flowers. Flowers can cost up to $300
- Funeral home service costs. Don't forget the costs of venue hire, director fees, celebrant fees, dressing and embalming.
It is also important to ensure that you won’t end up paying more for funeral insurance over the life of your policy than your funeral will actually end up costing. With this in mind, look for a policy that offers the following features:
- Choice of premium type. Choose either a stepped or levelled premium, depending on your preference for short term or long term savings.
- Accidental death cover in the first 12 months. This feature ensures you are covered for accidental death if it occurs within the first 12 months of taking out a policy.
- Premium caps. This feature ensures that your premiums cease once they've reached the sum you originally insured for.
- Premium guarantee. This is a guarantee that your premium will never go up. In some cases you may even be offered a premium discount for holding the policy for a certain time (e.g. 5% discount for every five years held).
- Payout guarantees. This ensures you're paid the greater amount between your total premiums paid and the amount your ensured for.
Most of the time people fall into traps due to not fully understanding funeral insurance terminology or failing to insure themselves adequately. Some common mistakes you can easily avoid when shopping for funeral insurance are:
- Not taking out enough cover. This may result in your family having to cover some your funeral costs. Make sure you have an understanding of how much your total funeral costs will be.
- Failing to read the fine print and the general exclusions. Understand what certain policy features mean. For example an automatic index benefit will increase the sum insured each year to meet inflation, however this also means that your premium will also be increased.
- Ending up paying more for cover than your funeral would cost. If the policy is held long enough, you may end up paying more than the sum you originally insured. Finding a policy with a value guarantee can help you avoid this.
- Not considering the long term cost of a stepped premium. Choosing a stepped premium will give you a lower premium today however this means it will rise as you age.
Yes, as well as looking at the key features of the policy, studying the fine print and avoiding the common mistakes mentioned previously, you should also take these factors into account:
- Is there a waiting period? Most funeral insurance policies will have a 12 month waiting period before you are covered.
- What is the cooling off period? Keep an eye out for the cooling off period. This will allow you to get a refund on your premiums if you change your mind. Most funeral insurance policies offer a 30 day cooling off period.
- Who is the underwriter? Look for an underwriter that is reputable. A good underwriter will have experience in the sector and is worth looking out for.
- Is it easy to make a claim? When you read a review, make sure you understand what the claims process of the policy entails. A funeral insurance policy should have simple and straightforward claims instructions. Some policies have specific requirements when claiming that can result in unnecessary back and forth if you are not aware of such requirements.
- Do you already have cover for funeral expenses. Don't double up on funeral insurance (unless your existing cover is inadequate). If you have life insurance it may include a funeral expenses benefit that adequately meets your needs.
You can find funeral insurance reviews from the following internet-based sources:
- Customer review websites and forums. These sites provide customer reviews on their experiences with purchasing a policy, making claims and what a brands customer service is like.
- Insurer websites. Funeral insurance websites will usually feature testimonials from its customers.
- finder.com.au. finder.com.au provides impartial reviews on funeral insurance that aim to educate the reader by breaking down policy features such as:
- The level of cover available
- How quickly benefits will be paid
- What payment options you have
- If there are any value guarantees
- Whether automatic acceptance is guaranteed
- Where and when you are covered
- Eligibility requirements for policy applicants
- How you can make a claim
Reading funeral insurance reviews can give you a better understanding of the product and insight into the customer service of the provider. However, it is very important to not simply base your decision off one review and to look out for the following:
- Disgruntled customer reviews. Beware that some reviews may come from disgruntled customers who have not read the exclusions of their funeral insurance policy properly, or the claims process carefully enough. Remember, customers will rarely take the time to publish a positive review.
- Reviews found on insurers website. Although these can provide you with a quick indication of the main benefits of the policy, make sure you take these reviews with a grain of salt as negative reviews are unlikely to be published on an insurers website.
- Ratings on insurer websites. Some websites may include ratings from industry bodies. These ratings however are only one opinion and should never be the sole reason for purchasing cover. Always remember to review the policy thoroughly.
- Reviews that are too good to be true: There are instances where fake customer reviews may be written to give a favourable opinion of an insurer and its policy. Use your best judgement to determine the reviews reliability by comparing it with other sources and feedback.
You can also fund the cost of you funeral through these means:
- Life insurance
- Funeral bonds
As with funeral insurance, each of these options have their own pros and cons, so remember to think carefully about your own requirements when considering them. However there is nothing wrong at all about exploring alternatives, and you may find one of these options meets your needs better than funeral insurance.