The expenses associated when someone passes away can be substantial. If you aren’t prepared for it, you may end up paying more for your funeral or risk leaving your loved ones deep in debt.
Indeed, mortality isn’t exactly the ideal conversation subject, but it’s a reality you’ll want to plan for and address. But is funeral insurance the right way to do it? Lets have a look.
Unfortunately, while insurance does give you a way to cover funeral cost, you could end up paying more in premiums than the actual value of the funeral cover.
Covering the Cost of Your Funeral
Funerals in Australia are estimated to cost anywhere from $4,000 to $15,000. The amount you spend will depend on the kind of funeral, from a simple cremation to an elaborate ceremony, with an embellished casket. Other items that require payment may include permits, clergy, transport, funeral director, and the like so the costs will add up. Many may choose funeral insurance to pay for these future costs.
Unfortunately, while insurance does give you a way to cover funeral cost, you could end up paying more in premiums than the actual value of the funeral cover. When you’re older, you pay for higher premiums. Actuaries share that taking out insurance at the age of 65 could mean your premiums add up to the costs of four funerals when you turn 91.
There are fixed premiums but these generally depend on gender and the state of one’s health. And though calls for reforms to funeral insurance have resulted in some improved terms, you do have a better option to cover all or part of your funeral’s cost.
A Better Way to Prepare
Prepaid funeral plans offer a better way to cover the cost of a funeral because the prices are locked in at the current rate. You pre-pay for the funeral without worrying about rising premiums. You and your family are also protected from price increases on arrangements you have selected. And the services involved are covered, regardless of what they will cost in the future.
You could pre-pay choosing from three options:
- pre-purchased products, which is when you pay for a cemetery plot or wall niche;
- pre-paid plan, which is when you pick the kind of funeral you wish and pay for it in full or opt for installment payments over a certain period, and
- small contributory funds, which is when you make small but regular payments to a funeral director for all or part of a funeral service.
It’s unsettling to think about your mortality. But it’s better to prepare for it than to risk burdening your loved ones with a financial obligation, on top of the emotional anguish of losing you. So consider pre-paying for your funeral now and relieve yourself and your loved ones of future burdens.
Still have questions about pre-paid funerals plans?