Should I pay for my funeral with life insurance or funeral insurance?

Not sure how life insurance and funeral insurance differ when it comes to paying for a funeral? Read on to find out.

One of the common questions that people ask when someone close to them passes away, either a family member or friend, is "How much does a funeral cost?" As there is no real "one size fits all" approach to take when considering funeral costs, it really comes down to the family's particular needs and cultural traditions. This article will give an overview of some of the common costs associated with having a funeral and offer guidance on how these expenses can be covered.

What are the Different Ways to Fund a Funeral?

There are a number of ways that you can consider to fund your own funeral arrangement:

  • Life Cover. When determining the amount of life cover that you and your family may need, include an amount to cover your funeral expenses. Your family may need to cover the funeral costs incurred at first; however, with a successful claim, the benefits paid can be used to reimburse all the costs associated with the funeral arrangement.
  • Funeral Cover. Funeral cover is designed to provide a benefit payment to cover all the costs associated with your funeral. This type of insurance is particularly beneficial for individuals who may not be eligible to apply for life cover due to age and/or health restrictions.

Term deposit/savings account. You can put aside some funds to pay for your funeral arrangement in a term deposit or online savings account until you have accumulated an amount that will cover the expenses.

  • Centrelink or Department of Veterans Affairs. You may be eligible for death benefits when applicable from Centrelink or the Department of Veterans Affairs.
  • Superannuation. In the event of your death, your dependants will receive a payout from your super balance from your superannuation trustee. For super death benefits, 'dependants' are classified as either:
    • Spouse/partner (which includes same-sex de facto partners)
    • Children
    • People with whom you had an interdependency relationship with
    • People who depend on you financially (could be siblings or aging parents)

Why Do Funeral Costs Vary?

Funeral costs will vary significantly depending on your or a family's needs and requirements, so there is not one set cost to cover all that is needed for your funeral arrangement. According to Money Smart (2013), the average cost of funerals in Australia can cost anywhere between $4000 up to $15,000.

The cost of a funeral director's professional service can also differ greatly, with fees starting from $450 to $2750, and between $129 to $1995 for transportation of the body (Choice, 2011). Then, there are also other costs that you may need to consider (which will be discussed in the next section) and all of those items will make up the total costs of arranging a funeral.

From my own experience with a family members funeral earlier this year, the final cost of funerals can be quite significant. This makes it extremely important for everyone to have some planning in place to cover this expense in the event that a loved one passes away. Doing so will mean that you do need to endure financial strain in giving the funeral that your loved one would have wanted.

What are the Costs associated with Arranging a Funeral?

Most funeral home services are often unable to disclose a standard or set price for a funeral as each case is to be treated with an individual and tailored approach. Every individual and/or their family members may require for the funeral to be held in a certain way, according to their religion, ethnicity or cultural background (Dale Maroney, 2013).

A modern approach can also be used to in arranging a funeral and is often personalised to fully reflect the deceased's life and what he meant to the people he left behind (Dale Maroney, 2013). For example, if the deceased was a musician, the family may choose to hold a small concert as part of the proceedings to honour his life and his love for music.

Some of the typical costs of a funeral arrangement are (but not limited to):

  • The cost of the coffin or casket
  • Funeral director's service fees
  • Burial or cremation service fees
  • (If opted for burial) the cost of purchasing a burial plot
  • A burial plot/grave liner
  • A grave marker/tombstone
  • Urn (to store the deceased's ashes)
  • Flowers
  • Transportation
  • Cost to hire a venue to hold a memorial service/wake
  • Celebrant or clergy hiring fees
  • Newspaper notification/obituary
  • Death certificate
  • Other costs; such as food, beverages, ritual equipment expenses, etc.

It is important to remember that some of these costs may be bundled as a package provided by the funeral home of your choice, or as part of the funeral director's service, although the items and services covered may vary greatly.

Considerations for Life Insurance and Funeral Cover

If you are relatively young and healthy, and would like to prepare for your funeral arrangements, you may want to consider applying for a life insurance cover. Whether or not you have a family, life cover does not only provide the funds for your financial dependants to pay for your funeral expenses, but also to pay off all the debts you have accumulated and to help your family with ongoing living expenses.

Alternatively, if you are not eligible for life cover due to age restrictions, poor health conditions, or other high risk factors, you may want to consider funeral cover. You can often obtain funeral protection without having to go through a medical exam and you will be automatically accepted up to 80 years of age. Upon the event of your death, there won't be any delay in receiving the funeral benefit. Once a successful claim is made, the funds will be released immediately.

Either life insurance or funeral protection can provide you with the peace of mind of having enough money put aside to fund your own funeral and not leave your loved ones to shoulder all the costs. Once all the funeral expenses are covered, your loved ones can use the remaining benefit payment any way they see fit.

Be Prepared for Your Own Funeral Expenses with Life Cover or Funeral Protection

Thinking about your own death may not be something that you really want to look forward to. But, it is important to keep in mind that funeral costs are not cheap and more often than not, if your death happens unexpectedly, it may have some serious financial repercussions to the people you leave behind.

With life cover or funeral protection (including other funding medium as you see fit), you are making sure that your dependents are well taken care of financially and can hold a funeral arrangement without all the financial stress.

Compare funeral insurance currently offered by Australian providers

Name Product Maximum cover Maximum Entry Age Minimum Sum Insured Guaranteed Future Insurability Expiry Age Short Description
No expiry age as long as premiums are paid
Take out an InsuranceLine Funeral Insurance policy and you could receive a bonus $100 gift card. T&Cs apply. Ends 31 March 2019.
No expiry age as long as premiums are paid
Get the Funeral cover up to $15,000. Plus Medibank health insurance members can save 10% off premiums.
No expiry age as long as premiums are paid
Receive up to $15,000 in funeral cover. Premiums reduce by 5% every 5 years you hold your Policy.
No expiry age as long as premiums are paid
Get up to $15,000 in funeral cover with Guardian Funeral Insurance.
No expiry age as long as premiums are paid
Get up to $15,000 in funeral cover with Australian Seniors Funeral Insurance.

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The amount you would like your family to receive to cover your funeral expenses. If you are not sure what costs that are involved in a typical funeral arrangement, it is advised to speak to an insurance consultant.
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Maurice Thach

An insurance researcher and writer for who loves finding an answer to the question "Am I covered for ________?" Maurice has also completed a Tier 1 Life Insurance and a Tier 2 General Insurance Certification under ASIC's Regulatory Guide 146. This means he can confidently provide general advice for life insurance and non-life insurance products.

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2 Responses

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    gregAugust 16, 2016

    just started funeral insurance with seniors just read that if i live over 75 years my wife gets nothing is it the same with all these companies

    • finder Customer Care
      MauriceAugust 16, 2016Staff

      Hi Greg,

      Thanks for the question. You’ve come to and we are a comparison service, not an insurer.

      While some funeral insurance policies do state to offer no expiry date on claims, we can’t provide you with a specific recommendation.

      If you would like to speak to an adviser about funeral insurance they can help you switch and find a policy for your needs.

      I hope this helps,


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