Your options for securing the expenses of your funeral
Most of the funeral insurance adverts you come across on daytime television will tout how taking out coverage is affordable – they’ll even make comparisons such as the cost being equivalent to as little as that of a cup of coffee daily!
If what they say is true, even a pensioner on their limited income should find it affordable, but there’s a catch – often, the premiums which are initially cheap, will increase as the years pass. This fact is conveniently overlooked by most for profit funeral insurance ads.
Fortunately, there are several other options you can consider to attain peace of mind with regards to your funeral management.
Prepaid funeral plans
With funeral plan management so expensive nowadays, there are many Australians who are resorting to options that let them plan out and pay for their funeral in advance.
Pre-paid funerals let you fix your funeral’s price according to today’s rates. A contract is signed with the funeral director of your choice which sets out the type and style of funeral you want, at an agreed price. Your family members do not have to pay an additional money at the time of the funeral which means you are shielded from the rising funeral expenses in the years to come.
The money paid for your prepaid funeral plans is invested in a funeral trust, and is only accessible to your funeral director at the time of your passing. In the event that your chosen funeral director closes their business, your money gets allocated to another funeral director of your choice. As an alternative, you could buy a funeral bond, which is a managed investment that gathers interest, and assign its benefit to a specified funeral director.
Life insurance policies
Also called the over 50 plans, these pay a lump amount of cash at the time of your passing, but unlike prepaid funeral plans Australia, your family member will have to arrange the funeral.
You could spread the cost out, but you may end up paying more than the chosen amount of benefit in the long run.
Also note refunds are only possible during a pre-specified cooling period and that premiums normally increase with your age.
If funeral costs continue to rise at the current rate, a savings account won’t gather sufficient interest to keep with the pace. To ensure that relatives have access to cash upon your death, set it up as a joint account with a family member.
Payment from your estate
The expenses associated with your funeral can also be paid for from your estate. Normally, banks will release funds if they are given an itemised account from the funeral director alongside a copy of the death certificate.
There a number of funeral insurance companies that provide a value guarantee with their policy which is a promise that your beneficiaries will never get an amount lesser than what you have paid for in premiums.
To sum it up, remember that there is no such thing as cheap funerals today, and that you’ll have to put some sort of funeral payment solution in place so your family members have some solace at the time of your death.