Funeral cover

Funeral cover is also called funeral insurance. Like other types of insurance you make ongoing payments and a fixed amount is paid by your insurer on your death.

Funeral expenses will vary depending on the arrangements you want but as a general guide, a funeral can cost between $4,000 and $15,000.

Before taking out funeral cover keep in mind that:

• your insurance premiums will go up over time
• if you don’t make the payments, or you cancel the policy, you’re unlikely to get any money back
• the total payments you make could end up being more than the payout your family gets
• most insurers will only cover you for accidental death in the first 2 years, so your family will receive no benefit if you die from an illness (not an accident) during this initial period
• you may already have funeral benefits as part of your superannuation or if you are a member of a union.

Other ways to pay for a funeral

Superannuation

If you have a life insurance policy with your superannuation fund, the money can be used to pay for your funeral. However, it may take some time for your family to get the payment. They may have to pay for your funeral and be reimbursed later.

In special circumstances you can apply for early release of superannuation to help you pay for:

• the funeral of a person in your care
• medical costs if you have a terminal illness.

Find out more about getting superannuation early.

Union benefits

Many unions offer a funeral benefit for their members. Contact your union to find out more.

Funeral bonds

Funeral bonds allow you to save for your funeral by investing a lump sum or by paying instalments. The money you’ve saved:

• will grow with interest (but this may not keep up with inflation)
• can only be used to pay for your funeral
• is not subject to the Age Pension asset or income test
• may not be paid if you decide to discontinue the bond.

Pre-paid funeral plans

Pre-paid funeral plans let you pay your funeral expenses in advance. You can pay through a lump sum or regular instalments.

A pre-paid funeral:

• can cost you less than funeral insurance if you live for another 5–10 years
• is not affected by inflation—you'll get the funeral you paid for, regardless of rising costs
• allows you to specify funeral arrangements (e.g. the type of casket)
• can be inflexible (e.g. if you change your mind or move interstate you may not be able to transfer the plan).

Before deciding on a pre-paid funeral plan you should:

• shop around as different funeral directors offer different packages
• read your client care statement carefully so you know exactly what you're paying for.