3 things to know about funeral insurance
3 things to know about funeral insurance
Funeral insurance isn't something that most people like to think about, but having a suitable policy in place can help give you peace of mind that your family will have the money to take care of your funeral costs and other expenses during a distressing time.
Looking after the family
There are a variety of expenses that can arise after a loved one has passed away, and not all of them revolve around the cost of the funeral. Your family may have to deal with other costs, and debts that have been left behind, such as credit card bills or expenses for family to travel interstate to attend your funeral. These expenses can add a heavy burden on your family at an already difficult time, and not all families are fortunate enough to have the money immediately on-hand to cover these expenses, so planning ahead and arranging funeral insurance could really make a financial difference for your loved ones.
One of the great advantages of funeral (or final expenses) insurance is that the benefit payment isn’t restricted to funeral expenses. While it’s primarily designed for this purpose, your nominated beneficiary can use the funds however they see fit, so you can feel secure that your family will have the flexibility to exercise their own discretion when deciding how to spend the money.
How does funeral insurance help?
An advantage of funeral insurance is that the funeral benefit is paid quickly to your family, usually within 24 hours of submitting the completed paperwork. If you were to try and save for these expenses, it could take many years to accrue enough money to pay for your funeral, while an insurance policy will pay the benefit regardless of how much you’ve paid in premiums.
For example, if you decided that your family would require $10,000 to cover the cost of your funeral and put aside $15 a month into a savings account earning 3.5% interest per year, it would take a total of 31.2 years to save the $10,000.
Even saving a larger monthly amount of $40 would still require 15.8 years to meet the same sum under the same conditions. This doesn’t account for any additional unexpected costs that can also take a toll if you need to dip into your funeral savings.
As long as your premium payments are kept up to date, your family will receive your agreed benefit amount, regardless of when you pass away. After age 85, you can cancel your policy and choose the early cash payout option to get 75% of your funeral cover amount OR keep your policy and get a 25% bonus cover at no extra cost when you pass away or reach age 100.
What are the benefits?
Depending on the type of policy you have, your family can receive an immediate cash payout after death has been certified, and in the case of an accidental death, your family may receive triple the benefit. For the policies Choosi arranges direct, you can select cover from $3,000 to $15,000, and you’ll be covered by your policy even if you’re overseas.
Things you should know: There’s no refund of premiums after the cooling off period. The total amount of premiums payable over the life of the policy has the potential to exceed the cover amount. If you choose the early cash payout option, you’ll no longer be eligible to claim as this option will cancel your policy.