Dealing with the passing of a loved one is already difficult enough, without having to face the added pressure of sorting out those debts and any final expenses that can be left behind.
Funeral insurance and final expenses insurance can be very helpful for families managing unexpected bills after the loss of a loved one.
These policies provide a lump sum benefit that can be used to either cover the costs of the funeral, or cover any other expenses that your nominated beneficiary needs to pay. Having this policy in place can give you peace of mind that your family won't be left scrambling to deal with the financial effects of your loss.
When it comes to pensions, mortgages and insurance policies, having a plan in place could help couples both emotionally and practically. These preparations could also help to facilitate smoother economic changes and transitions after the incident.
If you are considering taking out a funeral insurance or final expenses insurance policy as one option, it can be useful to know about the different policies and what you can expect.
Funeral insurance can go a long way towards relieving your family of some of the financial burden following the passing of a loved one. The reality of paying for a funeral can often surprise family members, adding another potential source of stress at what is already a sensitive time.
MoneySmart, the Australian Securities and Investments Commission (ASIC) financial guidance resource, states that a funeral in Australia can cost anywhere from $4,000 for a simple cremation to up to $15,000 depending on the size and scope of the service.
The lump sum benefit for funeral insurance can help cover some of these costs.
Typically, the amount of cover available can range from $3,000 to $15,000, which is subject to a 12 month waiting period except where death occurs due to an accident. In some cases, the benefit you receive may also increase in the event of an accidental death.
Final Expenses Insurance
Alternatively, you may also wish to look at final expenses insurance, which is essentially another type of funeral insurance that is available to help after the passing of a loved one.
Like Funeral Insurance, with this type of cover, you can ensure your family will receive a benefit that can go towards covering any expenses that may need to be arranged after you are gone - not just those of your funeral.
Both funeral and final expenses insurance have different premium options, so you can choose an option that best suits you and your circumstances. For example, to help with budgeting, you can choose a fixed premium rate option, which means your premium rate will stay the same. While your premium will increase under this option if you accept the annual cost of living increases, any increase is proportionate to the change in your Benefit Amount, and you have the option of rejecting this increase each year.
Whether you decide to take out funeral or final expenses cover, it is important to note that if you hold your policy for an extended period of time then you may pay more in premiums than the sum of the benefit pay out.
In addition to this, if the policy is cancelled and the cover ends, the benefit will not be paid. These factors can influence your final decision, so it may be prudent to compare final expenses insurance quotes with Choosi to select the most suitable policy for your needs.
These articles are provided as reference material to allow more informed decision making, but are not intended as being a complete source of information on any topic. All readers should make their own independent analysis on the topic to make sure they have considered the aspects that are important to them.