Is prepaid better than insurance?

When considering how you will meet the costs of a funeral, you have three options; prepaid, insurance or leaving your family to deal with the cost. For those who are pragmatic, making arrangements before they die is often preferable, not only do you save your family the burden of arranging and paying for a funeral, you also get the chance to have the send-off you choose.

On first inspection, funeral insurance may seem more affordable; only small premiums each month, but when calculated over an extended period of time, you could end up paying $1000s more than a prepaid option.

For example*:

Funeral insurance – a male age 60, living in NSW, who lives to 83, could pay $11,724 in premiums towards a funeral that would today cost him $6500.

He may have a funeral insurance policy that guarantees the payout to be the sum insured or the sum of the premiums paid (whichever is greater). When the man passes, the premiums of $11,724 may be paid back, but the cost of a future funeral may be higher due to inflation. Assuming an inflation rate of 3.5%, the future funeral may be as high as $14,340. His family will still need to pay an additional $2,616 to get the funeral he wanted.

Using the example above, the financial benefit of prepaying a funeral is clear; $6500 today, with no additional costs to pay.

To find out more about prepaid funerals and the options available, visit

* Funeral insurance figures based on Rice Warner Actuaries Report, March 2015, Pre-Funding Funerals

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