Planning your own funeral is popular in Australia as it can save money and take stress off your loved ones. Here’s a few things to keep in mind if you’re considering it.
A prepaid funeral allows you to make decisions about your own funeral.
There are a few pros and cons to prepaid funerals and the benefits can vary by state.
A prepaid funeral is not your only option for funeral planning.
What is a prepaid funeral plan?
A prepaid funeral plan is a contractual agreement made with a funeral director. It allows a person to make decisions about their own funeral - and pay for the costs - before they die.
This type of funeral plan gives people the power to choose details about their own funeral and is generally cheaper as they're able to lock in today's prices for goods and services.
How are the funds released for a prepaid funeral plan?
When you organise a prepaid funeral plan, your money is generally kept in an independent funeral fund, registered with the relevant state authority, to keep it safe.
This protects you in case the funeral director goes out of business or doesn't follow through with the agreement. The money is only released to the funeral director after the funeral has been held and the contract requirements have been met.
Be aware: ACT and NT have fewer protections around prepaid funeral plans compared to the rest of the country. Always compare your options and read contracts carefully.
Pros and cons of a prepaid funeral plan
Pros
You get to make decisions about your own funeral, including preferred casket, service type, and many other details.
The cost of the funeral is calculated, and locked in, at today's prices - regardless of how much the cost of goods or services has increased by the time you die.
Pre-paid funerals can have a positive impact on your pension, as they are excluded from income and assets tests, regardless of the prepaid amount.
Cons
Pre-paid funerals are often made with local funeral directors. If you move outside of the area of service, your contract may be void.
The specific details you choose - such as a casket type or floral arrangement - might not be offered by the funeral director by the time you die.
There's a lack of flexibility with pre-paid funeral plans. If you change your mind, you might find it extremely difficult to change your funeral plan.
What to be aware of when arranging a prepaid funeral
Relocating could void your contract. If you move outside a funeral home's service area, it may not be required to perform the service and your money could be lost. If the funeral home agrees to transfer the contract to another funeral home, extras fees are often incurred.
It's not always possible to change your mind. If you decide you want a different type of funeral, or at a different price point, updating your wishes can be extremely difficult and sometimes impossible.
A pre-paid funeral is a legal contract. They can be confusing and convoluted. You may want to get a lawyer to look over the details.
ACT and NT have less protection for pre-paid funeral plans. If a funeral home goes out of business, you may be at risk of losing your money.
What are my other options for funeral planning?
Pre-paid funeral plans aren't the only way to plan or pay for your funeral in advance. There are other options, including:
Funeral insurance: Pay a monthly or annual premium to an insurer. When you die, your nominated beneficiary will receive a lump-sum for however much you nominated when taking out the policy. Usually, it's between $3,000 and $15,000.
Funeral bonds: Usually offered by a funeral home, life insurer or friendly society. WIth funeral bonds, you pay a deposit then make regular payments over time. Your money earns interest and can only be used for your funeral.
Life insurance: Most life insurance policies include a funeral benefit. However, if you have a stepped life insurance policy that regularly increases in price, be aware that the cost could become prohibitive as you reach old age.
The cost of a funeral
According to pricing data gathered from over 600 funeral directors and published by end-of-life specialists Gathered Here, the average cost of a funeral in Australia is $8,274. However, pricing can vary greatly depending on the type of funeral you choose.
Full funeral - $8,274 Basic funeral - $5,766 Simple cremation with no service - $3,513
Cremation with service and committal - $6,340 Simple, graveside burial - $5,161 Burial with service and committal - $5,714
FAQs
With funeral insurance, you pay regular premiums to an insurer and your nominated beneficiary receives a lump-sum when you die, to spend however they see fit. With a pre-paid funeral, you are required to cover the full cost of your funeral but get to choose specific details.
The best insurance plan for you may be different to someone else. Look for a plan that meets your specific requirements and is within your budget. Always read the product disclosure statement (PDS) carefully.
The average funeral cost in Australia is $8,274 for a standard funeral or $5,766 for a basic funeral.
Centrelink doesn't offer specific financial help for funerals but it does provide a bereavement payment to eligible recipients that could be used by family to help with funeral costs.
Nicola Middlemiss is a contributing writer at Finder, with a special interest in personal finance and insurance. Formerly a business and finance journalist, Nicola has written thousands of articles helping Australians better understand insurance and grow their personal wealth. She has contributed to a wide range of publications, including Domain, the Educator, Financy, Fundraising and Philanthropy, Insurance Business, MoneyMag, Mortgage Professional, Yahoo Finance, Your Investment Property, and Wealth Professional. Nicola has a Tier 1 General Insurance (General Advice) certification and a Bachelor's degree from the University of Leeds. See full bio
Nicola's expertise
Nicola has written 239 Finder guides across topics including:
Personal finance
Personal insurance, including car, health, home, life, pet and travel insurance
With Funeral Plan from Guardian Insurance, protect your loved ones against the financial burden that they may have to endure when you pass away. The lump sum benefit can help pay your funeral expenses and any other expenses that may arise.
Looking for cheap funeral insurance? Avoid getting ripped off or paying more than you need with this handy guide.
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