The death of a loved one is a topic many would rather push to the back of the mind. But not preparing for it can have unfortunate consequences – not just on mental and emotional health, but also on family finances.
Figures from the Australian Bureau of Statistics (ABS) show the stark reality of the rise in the country’s death rate. Between January and 31 July 2022, there was a 17.3 per cent increase in deaths above the baseline average.
Looking at those figures in detail, deaths due to dementia were 19.8 per cent higher than average, diabetes deaths were 21.3 per cent higher, and cancer deaths 5.8 per cent higher.
According to the Australian Seniors Cost of Death report, published in 2019, almost 70 per cent of survey respondents said it took them six months or longer to recover financially after the death of a loved one. Almost three in 10 respondents (28.6 per cent) said it took them more than a year to recover.
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Bruno Muraca, a personal insurance claims advocate with AFRM Claims Advocacy, says families often fail to consider how existing life insurance can help in such circumstances. “Given that the average life insurance policy claim is just under $300,000, it’s an important consideration that can alleviate financial stress at a very difficult time,” he says.
The average cost of a private funeral in Australia is generally between $4000 and $15,000. For many, that cost coupled with ongoing day-to-day expenses can be overwhelming, coming on top of the grief and upheaval associated with a loss.
At such a vulnerable time, says Mr Muraca, the grieving family might not realise the financial relief that may be available to them.
One common example relates to claiming the life insurance in a loved one’s superannuation. Many super accounts have a life insurance policy attached to them, one that the deceased’s loved ones may not be aware of.
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The average life insurance claim in Australia is $299,000, so being aware of and making a claim on that insurance can make a huge difference to a family and/or partner after the death of a loved one.
Life insurance claims are available, even if the policy holder passed away years ago – so long as the deceased had an active policy (or superannuation fund) at the time.
This is where personal insurance claims advocates such as Mr Muraca can help.
“When losing a loved one, you’re not at your best and it can be challenging to think clearly and collate all the paperwork correctly associated with a life insurance claim,” he says. “What is important to a family at that time is peace of mind and removing the administration burden by helping them complete the paperwork.”
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Personal insurance claims advocates are a relatively recent phenomenon in Australia, but one that many are starting to take advantage of. For many, the advocacy has been of huge benefit in financial and organisational terms.
“Recently, we helped a family that had lost a loved approximately three years ago,” said Mr Muraca. “The loved one (who passed away) typically looked after the household finances and his partner only just thought to have us check if he had life insurance in his super.
“As it turned out, he did, and the family can now continue to live the life that he would have wanted for his family.”
For anyone considering making a life insurance claim on behalf of a loved one, the federal government’s ASIC Moneysmart website is a good starting point.
Have you had to deal with a loved one’s finances after their death? Was it a difficult process? Why not share your thoughts in the comments section below?
