Funeral insurance not worth the expense, say experts

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A concerted advertising campaign by many funeral insurers over the last few years has convinced many consumers that they should prepare for the costs of their own funeral.

While there is an attraction to removing the burden of dumping extra costs on your grieving family, you should be clever about the method you choose to achieve this goal.

The Financial Rights Legal Centre (FRLC) explains that there are much better alternatives for paying for your own funeral before choosing the expensive option of funeral insurance.

Prepaid funerals, funeral bonds and life insurance are much more cost-effective options for covering funeral costs.

According to the FRLC, the biggest downside to funeral insurance is that if you miss too many payments you may lose all of the money that you have invested.

Also, not only will you need to keep making payments over the years, but premiums usually increase with age and grow over time. 

Under some funeral insurance plans, you can end up paying more money in premiums than the cost of an average funeral. 

An Invocare-funded study undertaken by actuaries Rice Warner found that a consumer who signed up for funeral insurance at age 60, and who then lived to 89, would pay about $85,000 in premiums for a $6000 funeral!

Prepaid funerals offer a better choice as all parts of your funeral are covered at today’s prices and they can be funded in ways that best suit your budget.

Another alternative to funeral insurance is your superannuation. If you have super, when you die, your super fund will pay out your balance along with any life insurance included in your policy to your beneficiaries. These funds can be used to pay back your family for the costs of your funeral.

If you are wedded to the idea of insurance, life insurance is a much better fit for purpose alternative, although you can also just look at the option of opening a special savings account and alert your relatives to the fact that these savings are to cover the costs of your funeral.

Have you ever investigated pre-paying for your funeral costs? Which option did you choose? Why?

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Written by Ben


Total Comments: 11
  1. 0

    I have a funeral bond. Years ago I heard a Centrelink Financial person give a talk, suggested the funeral bond. Depending how much you put in, can cover your funeral costs, any extra goes back to the estate. Up to a certain amount will not count as an asset for Centrelink. I was able to pay in full. It may be possibly to add to it in smaller amounts; I’m not sure about that. Worth investigating. Having the funeral bond is a fixed amount (unlike funeral insurance) and gives me peace of mind.

  2. 0

    On the advice of my Finacial Advisor I took out a Funeral Bond

  3. 0

    Their all a waste of money. That is Funeral insurance, Prepaid funerals, funeral bonds and life insurance

    • 0

      I am amazed at how negative this response is! You give no explanation for it. Why bother?

      Prepaid funerals are available from many companies which offer different levels of service to suit and as long as you know your money goes into a trust until you die, all will be well.

  4. 0

    not worth a keystroke. Had that many of them cold calling me with hard sell bullshit

  5. 0

    Check your “life insurance” policy – often attached to superannuation – many policies end when you reach 70.

    • 0

      In our area they advertise cremation funerals with all documents, ashes will be given to
      relatives for a private send off. The full cost is $2200 including GST. Pre-payment is possible. Sounds good enough for me.

  6. 0

    I took out a Funeral bond and rather than it being a fixed amount the interest gained is added to the principal, perfect

  7. 0

    Firstly, I decided to go for a burial plot. I realise some prefer “burn, scatter and have tea and bikkies” but I do not. Cost was $12,000 (once off) with $2,000 internment fee paid via a Funeral Bond. Further costs could easily be up to $8,000 depending on whether you buy coffin from Cosco or whatever. The burial plot can be used 3 deep and also is exempt from Centrelink for Assets test. I believe last I looked up to $12,500 (indexed) applied to Funeral Bonds being exempt. I agree with negative comments of Funeral Insurance. However, with blended families increasingly the norm, best to sort this all out with the huge send off etc managed by yourself!?

    • 0

      Gosh that is a lot for as funeral plot, whwere abouts is it?, I paid for mine, next to my husband when we were organising his funeral, only cost me a bit over $2,000.00. What do you mean by “once off”.



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