When a loved one dies, funeral costs are the last thing on their minds. Bereavement is a painful experience for anyone. People need a moment to process the overwhelming emotions that come with grieving. More importantly, they want to say goodbye to their friend or relative with a proper burial.
Funeral arrangements often come with hefty costs, though. We'll discuss the usual fees involved in funeral arrangements. Also, we'll cover some of the additional services and products available. Then, we'll explain the payment options that may reduce the financial burden from these costs.
When people are mourning, it can be challenging to analyze funeral costs. However, proper funerals and burials have underlying costs. Understanding the fees for the products and services helps the bereaved conduct the ceremonial rites. This facilitates planning a funeral that befits those who have passed away. Check out our extensive list of Melbourne Funeral Services to help you arrange a funeral for your loved one..
Which type of funeral costs less?
The cost of a funeral service varies widely depending on what you choose. If you're planning your funeral, you'll probably have a budget in mind, and it pays to shop around.
How much does cremation cost?
Generally, cremation is cheaper than burial and is estimated to cost between $3,108 to $7,187 in Australia, according to the Cost of Death Report.
As well as costs, you should think about whether cremation is the right service for your family. While there is no gravesite that your family can visit, they can scatter your ashes in a place that means something special to you, such as a favourite beach.
You can also choose to have your ashes kept somewhere, such as a memorial wall or garden in a cemetery, for example. While this gives your loved ones a place to visit, it is also more expensive.
How much does burial cost?
Burials are often more expensive than cremations. Much of the expense of burial is associated with the burial plot. The Cost of Death Report reveals that depending on your location and the exact type of service you choose, a premium burial in Australia can cost almost $19,000 in an area of metropolitan Sydney and over $13,000 in both Tasmania and the Australian Capital Territory.
Some Australians prefer to choose a burial service over a funeral for religious and family traditions. The benefits of this include having a designated site where your family can visit to remember you. Your loved ones can also bring flowers and take care of the burial site, which can be very comforting.
Burial Insurance: What Is It?
Whether it has a gentle name like "final expense insurance" or "senior life insurance" or is bluntly called "funeral insurance" or "burial insurance," a variety of plans are being sold to people who want to make sure they've tied up their financial loose ends before departing this life. Beyond marketing, burial insurance is nothing more than a form of whole life insurance. Many insurance companies sell it, from smaller ones you may not have heard to household names like State Farm and AIG.
- Burial insurance is often marketed to seniors as something crucial that they should buy to protect their loved ones from big expenses after they're gone.
- It's just a form of permanent life insurance with a small death benefit that your beneficiaries can use for any purpose.
- Burial insurance is easy to get and does not require a medical exam.
- The more affordable policies with better death benefits require completing a medical questionnaire and not being terminally ill.
- Burial insurance may not offer as much value per premium dollar as a larger life insurance policy.
- Setting up a savings account for the express purpose of handling funeral and burial costs is another option for people who are older or ailing and want to help their family with final expenses.
The Burial Insurance Sell
Often marketed to seniors, burial insurance speaks to practical and emotional needs.
Easy to get
You can buy the policy online or on the telephone without being subjected to a medical exam—because who likes those? Applicants are asked about their age, tobacco use, and whether they have certain serious health conditions. Here at Peter Tziotzis Orthodox Funerals, we provide religious and traditional funeral services.
Some policies do not even have medical questions, and acceptance is guaranteed. Unsurprisingly, they're called guaranteed acceptance or guaranteed issue life insurance. These policies are designed for people who are so sick they cannot qualify for any other type of life insurance.
Guaranteed issue policies do not pay a death benefit (the amount paid out to beneficiaries) for the first two or three years that the policy is in force. If they did, everyone would want to wait until they were on their deathbed, pay premiums for one month, and have their heirs get $25,000. No insurance provider could stay in business if they allowed this. However, if the insured dies during the waiting period, the policy's beneficiaries will get back the premiums their loved one paid, plus interest.
Burial insurance can be purchased for small amounts, such as $5,000 or $10,000, while another whole, guaranteed universal, or term life insurance policies may require substantially larger minimum coverage amounts of $50,000 or $100,000. The premiums for burial insurance may seem like a good deal, but it's hard to tell without getting personalized, competing quotes for larger policies.
A vehicle of love
The ads can be touching, touting burial insurance as one of the most important things you can do for your family, so they don't have to struggle to pay for your funeral and settle your bills. This is a worthy goal, but burial insurance is neither the only way to achieve it nor necessarily the best. That said, it can be a good type of insurance for people who only want a small policy and can't qualify for a larger or less expensive policy because of their age or health.
Other Insurance Options: Similar Costs, Higher Benefits
Here's why burial insurance can be a bad deal. The fact that a medical exam is not required means you're being insured as part of a high-risk pool of people.
Yet many people, even with health issues, qualify for policies that offer a better value in terms of the payout your beneficiaries will get relative to the premiums you pay. Don't assume poor health locks you out of other life insurance policies. Consider working with a broker who sells different types of life insurance (not just final expense) to see what you're eligible for.
Term life is often presented as an alternative, but this insurance expires after a set period, so it may not offer enough coverage for someone who wants to be sure their heirs will get cash when they die. If you die after the term ends, your heirs won't get a payout. As the name implies, permanent life insurance is guaranteed to cover your death at any age as long as you pay the premiums. Term policies also may not be available to older adults, or the premiums may be cost-prohibitive.
Burial insurance is designed for a specific type of person. If you are that type of person, it can be a valuable product. Where burial insurance gets a bad rap is that some insurers, brokers, and agents care more about making the sale than matching their customers to the best insurance product for their situation.
2 Types of Funeral Insurance Plans
There are two basic kinds of funeral insurance: standard and pre-need. Both will help you plan and set aside the funds for all of your final arrangements.
Standard Funeral Insurance
Offered by life insurance companies as a whole life policy, these are paid out to beneficiaries upon the death of a loved one to pay for final arrangements, which may include:
- Funeral home services
- Burial plot cost
- Opening and closing of the grave
- Casket prices
- Headstone, grave vault, flowers, obituary notices
- Cremation (learn more: How Does Cremation Work?)
- Urn costs
Your loved one is also able to work with any service providers they wish. The beneficiary may choose to apply some or all of the funds to other expenses or debts owed by the deceased, including:
- Legal services
- Medical bills
- Credit card debt
- Mortgage, car, personal, or other loans
Pre-need Funeral Insurance
Pre-need agreements are offered by life insurance companies and, in some cases, funeral homes. However, these funds are given directly to the funeral home you've chosen to work with instead of a designated loved one. They are paid out almost immediately after one's passing.
Pre-need insurance can help people save money by allowing them to pay for services that may be cheaper today than they will be in the future. However, if you pay more for your plan than you do for your funeral, your loved ones won't receive the difference (the same is true for burial insurance). That means that if you take out a $10,000 plan, but your final arrangements are only valued at $9,000, the funeral home won't give your loved ones the leftover $1,000. Learn more about what to do when a loved one dies.
Pros & Cons of Burial Insurance
If covering funeral expenses is one of the primary reasons you want a life insurance policy, burial insurance is an option. But there are some drawbacks if you go this route. Here's a look at some pros and cons of burial insurance.
- Typically does not require a health exam.
- The application typically asks few (if any) health-related questions.
- You can't be turned down for certain policy types, such as "guaranteed issue life insurance."
- With no health exam, you won't get a discounted rate if you are in good health.
- With little to no health information, the cost of the policy can be very high.
- Your policy will likely have "graded death benefits," which pays out only a refund of the premiums if you die within two to three years after buying the policy.
5 Unexpected Funeral Expenses You Should Prepare For
After having recently gone through a family funeral of my own, I find myself more sympathetic toward the character's outrage. When it comes to funeral expenses, it can seem that the prices for necessary services and products are out of proportion to any reasonable expectations. While funeral homes are required to give you an itemized list of prices for final expenses, it can still be very difficult to navigate the stress and financial worry of a funeral. Need help in planning a funeral service? Check out Peter Tziotzis Orthodox Funerals in Melbourne.
Here are some aspects of a funeral that cost more than you think:
Use of the plot
Purchasing a grave plot is not your only cemetery expense. While many people will make sure to plan by purchasing a plot for themselves, they might not realize that their family will have to pay more to use that plot.
Opening the grave is another service that the family will have to pay for to hold the funeral, and the cost can be an additional $300-$500 – and potentially more if you're holding the funeral on the weekend.
Newspapers used to print obituaries gratis as a service to their readers and the local community. Unfortunately, newspapers can no longer afford to do this. To have anything more than a brief death notice (which is still free), family members will need to spend $400-$500 for a longer obituary containing pertinent information.
Some cemeteries require you to use a vault within the grave. These vaults help prevent the grave from sinking as future deterioration sets in. The addition of a vault to the burial can add anywhere from $500 to $5,000 to the funeral cost. While no state law requires that cemeteries use a vault, you're probably not going to be in any shape to protest against it.
Caskets can be extremely expensive. You can find a plain pine box for as little as $500, but caskets can range up to $10,000 or more for mahogany or other beautiful materials.
Even if you're willing to go for the plain and simple casket, you might field a sales pitch for a sealed casket, which will protect the casket's interior from water and insects. These seals are generally just rubber gaskets, though. Plus, does it make a great deal of sense to protect a dead body?
Flowers through the funeral home are going to cost you. The base price doesn't include the cost of flowers, and adding them will cost you much more than normal flower arrangements would. Expect to spend between $250 and $1,000.