Funeral Insurance
Protect what's most important
Funeral Insurance
Protect what's most important

Funeral Insurance in Australia

Protect your legacy for the loved ones you leave behind

In the event of your death, funeral insurance can help your family alleviate the financial burden of having to pay for your final expenses. This kind of cover gives you the opportunity to plan ahead, put your affairs in order, and make sure that you are given the funeral service that you want.

You might be wondering if your current policy will help your loved ones through the initial stages of loss by covering your funeral costs or maybe you’re considering this kind of cover for the first time due to ageing parents.

Wherever you are in the process of inquiring about funeral insurance, the first steps are to know what you want, which type of funeral cover offers what you’re looking for and then compare your options.

What is funeral insurance?

Funeral Insurance is designed to cover the cost of your funeral after you die. You choose the level of cover you want. Cover usually start as low as $5,000 and goes up to $15,000. When you pass away and your insurer receives a valid death certificate, the lump sum is paid to the person(s) you have nominated to receive it.

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What is burial life insurance?

Funeral insurance is also sometimes called burial life insurance or final expenses insurance because the cash benefit is paid to the person nominated on your policy in order to cover the cost of your burial and other funeral-related expenses.

It’s not easy to think about your own passing, but there are factors that you need to consider when deciding whether you need burial life insurance and the level of cover you require to pay for the type of funeral you want.

Funeral costs you need to take into consideration

  • Payment for the death certificate or medical practitioner’s certificate.
  • Do you want to be buried in a coffin or cremated and placed in an urn?
  • Do you need to hire a venue for the service and will it be catered?
  • Will there be flowers and what kind?
  • How will the body be transported?
  • Do you want funeral notices or an obituary?
  • Will you have a funeral director to handle all these details?

Some of these costs might not be relevant to your specific needs, but it is helpful to get specific about what you want. Once you’re clear about your burial arrangement you can shop around and compare funeral cover options.

Who is eligible to apply for final expenses cover in Australia?

Generally, any Australian between 17 and 80 years old is eligible to apply for a funeral insurance policy. However, because each insurance company and each policy type is different, the entry age for eligibility might vary.

What is a funeral insurance policy?

A funeral insurance policy is a type of insurance contract that contains the terms and conditions associated with your choice of cover. Within your Product Disclosure Statement (PDS) you’ll know exactly what is and is not covered, how your funeral will be paid out and the responsibilities of the policy owner to make regular premium payments.

The details provided within the PDS will help you decide whether the policy will meet your needs or whether you should rather continue comparing funeral policies from other companies.

What to look for in a burial life insurance policy

Not all funeral policies are the same, so you shouldn’t assume that every funeral insurance provider offers the same level of cover, or even offers cover at the same costs.

What you need to look out for:

  • Will it cover accidental death?
  • Will it cover death due to terminal illness?
  • Will it cover death by suicide?
  • Will it cover death outside of Australia?
  • What are the particular exclusions attached to the policy?
  • Will the insurer offer a grace period when suffering a period of financial hardship?

Is funeral insurance worth it?

Funeral insurance cover is worth it if you want a policy that will pay out quickly to cover the costs of your funeral, sparing your family the financial burden of your death. It also ensures that you get the funeral that you want and planned for.

Recent research shows that many Australians aren’t aware of the overall cost of funerals. A good old fashioned pros and cons list may help you clear things up so that you can make an informed decision about how to cover the costs of a funeral.

Pros and cons of funeral insurance

Benefits of having Funeral Insurance Disadvantages of having Funeral Insurance
  • The application process is quick and easy, with little or no medicals required. Once your application has been accepted, you’ll be covered right away for the full amount.
  • Generally, only accidental death will be covered during the first 12 months of your policy commencing. After that, you’ll be covered for both natural and unnatural causes.
  • The lump sum benefit will usually be paid within 48 to 72 hours after your death upon receipt of a valid death certificate.
  • Each claim is carefully considered on its own merits, so it might take a while for the funeral benefit to be paid out if there is a delay with information or paperwork needed to process the claim.
  • Many insurers offer you a choice of premium structure. Stepped premiums start off cheaper but increase yearly vs Level premiums that start more expensive but does not increase every year.
  • Funeral premiums can be more expensive because policies are not usually underwritten and companies are carrying more of the risk.
  • Capped premiums are available from select insurers which ensures you never pay more than your policy is worth.
  • Not all insurers offer capped premiums, it’s important that you find a provider that does.
  • Some insurers will refund all premiums if death occurs due to natural causes within the first 12 months.
  • Funeral insurance cover is limited to a maximum amount, usually $15,000.
  • Some policies have a grace period of 3 months, during which time you can change or cancel your cover and you’ll usually receive a full refund of premiums paid.
  • If you cancel your policy or stop paying your premiums for any reason, you will usually lose all the premiums that you’ve paid until that point.
  • To keep up with the cost of living you can generally apply benefit indexation, which you can remove if premiums become too expensive.
  • If death was due to suicide or self-inflicted injury within the first 12 months of your policy commencing you will generally forfeit the payout.
  • You’ll typically have a choice of how you pay your premiums, either monthly, quarterly or yearly.
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  • If a family member joins the same funeral insurance company as you, then you might get a discount on your premiums.
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How to apply for funeral insurance

Funeral insurance generally offers guaranteed acceptance, meaning there is little to no medical tests or questions required and most providers will usually accept you if you’re between 45 and 75 years old. The application itself is generally the easiest part and can be done over the phone or online.

How to claim the funeral benefit

Once death has occurred, your primary beneficiary should contact your funeral insurance provider, who will then provide them with the claims forms. Your beneficiary then has to provide your insurer with a valid death certificate or proof of death from a registered medical practitioner, as well as the completed claim forms. After that, the insurer will review the claim and if approved the lump sum will be paid to your beneficiaries within 48 hours, depending on the insurer.

The paperwork required for a funeral insurance claim include:

  • The death and medical practitioner certificate.
  • Documents proving the identity of the deceased, like their passport or birth certificate.
  • The original funeral insurance policy documents.
  • The completed claim forms.

Who receives the funeral benefit?

The funeral benefit is paid out as a lump sum to the person(s) you have nominated as your beneficiary on your policy. Generally, you can select up to four beneficiaries when applying for cover, but you can change and adjust this at any time if you are the policy owner.

When is the funeral benefit paid out?

The funeral benefit will be paid out according to the terms of your policy and may differ between funeral insurance companies. Usually, death benefits are paid within 3 to 7 working days after receipt of all required documentation, but make sure you confirm this with your insurer.

  • During the first 12 months of your policy commencing the benefit will usually only be paid if your death was as a result of an accident.
  • After 12 months of your policy being in force the lump sum benefit will be paid out whether you pass away from natural or unnatural causes.

Frequently asked questions about funeral insurance

There are many options on how you can pay for your funeral, including:

  • Pre-paid funerals: Enables you to plan and pay for your funeral in advance through your local funeral director.
  • Funeral bonds: An investment product where your money is invested and earns interest so that you can accumulate funds to help pay for your funeral costs.
  • Life insurance that pays out a death benefit: Some life insurance policies may include a ‘funeral expenses’ benefit. Be sure to confirm with your insurer.
  • Personal savings: Some people want complete control and opt open a high-interest savings account, deposit funds into it on a regular basis, and ensure that their Last Will and Testament pays these funds out to your nominated beneficiaries specifically for the funeral arrangements.

Yes, it is possible to buy funeral insurance for your parents and assist them in having the type of final send-off they want. However, they must be within the entry age limits, and in most cases, they will need to be the policy owner. Alternatively, you could add Parent Cover onto your existing life insurance policy. Please talk to your insurance provider to discuss your options.

Funeral insurance is a good idea if you want to avoid your loved ones having to pay for your funeral. If you want to help your loved ones in this way, then shop around and compare funeral policies from a variety of insurance companies to find the right funeral policy for your requirements, at the best possible price.

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Published: October 17, 2017