Funeral insurance isn't something that most people like to think about, but having a suitable policy in place can give you peace of mind that your family will have the money to take care of your funeral costs and other expenses in a distressing time.
There are many different options to choose from with varying levels of cover, so it's a good idea to spend some time thinking about what kind of funeral insurance plans would best suit your needs and budget.
1. 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 upon 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 is 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.
2. Comparing a funeral bond to funeral insurance
Funeral insurance policies differ from funeral bonds or plans in that they provide a flexible form of financial assistance for your family, as they can choose to use the funds as they see fit. In contrast, a funeral bond is essentially an investment that is made for the sole purpose of funding a funeral and the funds can generally only be used for this purpose.
The advantage of a funeral bond is that it is like a savings plan. However, if you pass away before you have put in enough to cover your funeral your family will still need to come up with the extra funds.
3. How does funeral insurance help?
An advantage of funeral insurance is that it provides your family with an immediate benefit, 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, whilst an insurance policy will pay the benefit regardless of how much you have paid in premiums.
For example, if an individual decided that their family would require $10,000 to cover the cost of their funeral and put aside $15 a month into a savings account earning 3.5 per cent interest per annum, 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, illustrating the considerable effort required to accrue a viable amount on your own.
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.
4. 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. You can select the type of cover you want, typically ranging from $3,000 to $15,000, and you will be covered by your policy even if you are overseas.
5. Choosing a policy
With a range of seniors funeral insurance policies available, you can select a plan that will best suit your needs. Losing a loved one is a tumultuous time and can impact your family in different ways.
Making your wishes clear ahead of time can help your family adjust, while giving you peace of mind. Final expenses insurance gives your family a much-needed payout to help cover the cost of the funeral and any other expenses they may need to settle. You can also select an option to cover your partner and dependent children until they reach age 21.
A range of cover and benefits are available so you may wish to compare funeral insurance and Final Expenses Insurance Australia providers to find the best plan for you.
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.