How a prepaid funeral can help your Age Pension claim

Private Health insurance cover can reduce your tax burden.

Couple assess their finances and consider the value of a prepaid funeral

Changes to the Age Pension asset threshold have been much in the news lately, with legislation now passed that means from 1 January 2017, the upper thresholds will be reduced, while the lower thresholds will be increased. For those who may narrowly miss out on a full or part Age Pension due to these new thresholds, there is a cost-effective and legitimate means by which to decrease your assessable assets.

Under Human Services rules, the purchase of a prepaid funeral plan from a funeral director not only decreases the amount of assessable assets you hold, it also saves your family the hassle and financial worry of planning a funeral.

Regardless of the value of prepaid funerals, they are excluded from the asset test. From 1 July 2016, the Funeral Bond Allowable Limit applies and only the first $12,500 of a is exempt from assessment and this is indexed in line with the consumer price index (CPI) on 1 July each year. It’s important to consider how the applied rules will affect your claim for an Age Pension before purchasing.

So, what’s the difference between a prepaid funeral and a funeral bond?

Simply put, a prepaid funeral allows you to make all the plans for your funeral and pay at the rate quoted on the day. Prices will not rise and your family will not have to find thousands of dollars in a hurry when you die.

A funeral bond is a managed investment where the interest earned is added to the capital and is paid to your estate or funeral director upon your death.

Of course, not everyone has the money sitting around to pay for a funeral before the event, which is why Simplicity Funerals offers Australia’s leading prepaid funeral plan, with payment plans available to help you spread the cost.

As with any financial decision, you are encouraged to speak with an independent financial advisor before making any commitment.

Find out more about prepaid funerals at

For details of how funeral bonds and prepaid funerals are treated under the asset test, visit


    To make a comment, please register or login
    23rd Jun 2016
    I have a prepaid funeral but not in a position to vouch for the quality of the funeral.

    Its of no use in reducing the value of my assets because I don't own enough things to influence my age pension payments.

    I thought it was a good thing to have so I could show it to relatives and have them know they were not likely to get hit for the cost of my funeral.
    23rd Jun 2016
    Easier to bury your assets in the garden and dig 'em up when you need to buy another loaf.
    Take your rage to the ballot box.
    23rd Jun 2016
    yay, I can prepay my funeral, what joy.....would not pre paying a world trip also reduce my assessable assets and give me a lot more jollies.

    23rd Jun 2016
    We have prepaid our funerals which does a number of things. Aside from reducing assets, it allows us to choose the items associated with the funeral, the wake has had the venue and catering chosen and family don't need to find funds which they may not have readily available. It also allows family to grieve without the worry of rushing about organising and wondering if what they have chosen is OK.
    23rd Jun 2016
    I agree with ozirules
    Funeral expenses I have found in the past have always come out of the estate, the funeral director takes their fee and is prearranged fairly simply. So need for prepaid at all :-)
    Also Pre-paying a world trip would be a great idea except that it relies on trustworthiness etc of the vendor selling such a service. This issue can also apply to prepaid funeral
    23rd Jun 2016
    don't trust your world trip to one agent but book air fares, cruises, land packages etc. individually and take out travel insurance which covers cancellations etc. Now I'm retired half the fun of the trip is in the planning.
    23rd Jun 2016
    What happens if the funeral company goes bankrupt?

    Also you really cant pay for everything, and if you live longer than 25 years there is a tenure on cremation plots and in some states even burial plots.

    You also cant prepare for your plaque
    24th Jun 2016
    If they go out of business it is YOU that lose out -- and lose your money, NO way I would trust a prepaid unless it was withing weeks
    23rd Jun 2016
    Does anyone know if you can avoid using a funeral director, after death, and just lawfully arrange a private cremation? I know you need a doctor to ascertain death, and issue a death certificate,but how can you avoid funeral directors, per Se?!
    24th Jun 2016
    In New South Wales there are Funeral Industries Regulations administered by the State Health Department. I am not sure about the other states
    30th Jun 2016
    Doubt you can avoid using a funeral director. My husband passed away recently and he had wanted no service, so I arranged with the funeral director to collect the body from the hospital, prepare the body for cremation, take the body to the crematorium and bring the ashes back when done. They arranged everything which included the Doctor's medical certificates, certified death certificate, press notices (I had these ready) and cost just over $4,000. The basic funeral cost was $3,850, the press notices added to the overall cost.
    Suzie Cockroach
    3rd Apr 2018
    I would also like to know the answer to this question in regards Western Australia?
    23rd Jun 2016
    yes what happens if the funeral company goes out of business by time you need them???
    23rd Jun 2016
    The money is invested with an approved Insurance Company.
    You can include insurance which covers the cost of transporting your remains which would otherwise be very expensive even if it is only as few hundred kilometres - consider the fact that you may not be near your home or Funeral Director's location. It can cost thousands of $$$.
    Different Funeral Directors include extras not listed by others.
    You can state your wishes - burial or cremation - location of remains to be put. You can present part of your life story in advance.
    23rd Jun 2016
    I think prepaid or funeral bonds are a good idea, as well as taking the pressure off the loved ones when you pass on, it helps in reducing your assets to accomodate the forthcoming pension eligibility rules.
    My financial adviser cautioned me though, on where to purchase our "plan". He mentioned that if you purchase from a funeral director, and take out a (say)$10,000 plan, you will get a $10,000 funeral, where if you purchase from a financial service or qualified retirement living organisation, your funeral is paid for by the service and the remainder returned to your estate. Not everybody (certainly not me!) needs or wants an extravagant funeral!
    Barbara Mathieson
    27th Jun 2016
    Don't think Specific Funeral Directors should advertise on this site!
    Suzie Cockroach
    3rd Apr 2018
    I fully agree that this site should not be an advertisement for an individual funeral parlour! Where is the choice and diversity?

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