insurance 1

How Much Does Funeral Insurance Cost?

Table of Contents
    Add a header to begin generating the table of contents

    How much does funeral insurance cost? Does it fall within the typical price range for a funeral?

    It is safe to say that there is often much more involved in organising a funeral than initially appears to be the case, and it is possible that this is not a subject that many people wish to spend a lot of time thinking about.

    The logistics are something that not many people have probably thought about, let alone the costs that are involved.

    People who decide to purchase a funeral insurance policy in order to cover the costs of their own funeral do so by paying regular premiums on a monthly or biweekly basis, just as they would with other types of insurance. Looking for funeral services in Melbourne? Look no further, Peter Tziotzis Orthodox Funerals is here.

    However, how much does it cost for funeral insurance, and what factors should be taken into account when selecting a policy? We take a look.

    FAQs About Funerals

    2-5 days

    The length of time between death and the funeral service can vary depending on your instructions but it is generally 2-5 days.

    Most Australians associate a 'funeral' with an attended church or chapel ceremony, with a coffin or casket displayed, before the cremation or burial. But a 'funeral' can be more of a wake, celebration of life, or a memorial. It doesn't need to be formal or bleak.

    The legal personal representative, whether this be an executor appointed under a Will or an administrator of an estate (or the person entitled to be appointed administrator), is responsible for making the necessary funeral arrangements for the deceased.

    Spouse, parents, and children of the deceased will sit closest to the front. Sometimes close friends and "honorary family members" will sit with the grieving family. Other family members (siblings and their families, grandparents, aunts, uncles, cousins, etc) will be the closest to the immediate family.

    A next of kin is only legally responsible to cover or source funeral costs if they are named as the executor of the will, or if they enter into a signed contract with a funeral director to make funeral arrangements. There are several ways to source funds or pay for a funeral.

    How Funeral Insurance Plans Work

    When you pass away, your loved ones can receive a one-time payment to help cover the costs of your funeral through a funeral insurance policy.

    You make ongoing payments in the form of premiums once a month or twice a month for a predetermined level of coverage. In most cases, you have the option of selecting a cap ranging from $5,000 to $15,000, which will be paid to your family after your passing.

    Funeral insurance does not result in any savings towards the cost of the funeral. You are purchasing insurance so that you will be able to cover those costs at some point in the future.

    Please only sign up for the funeral cover and not the expense coverage. In order to make a claim, your family might be required to provide receipts as evidence of the costs associated with the funeral. It provides you with a lower level of legal protection and includes a large number of exclusions.

    Is Paying for Funeral Insurance Worth It?

    It is dependent upon the cost of your insurance premiums in comparison to the anticipated cost of your funeral expenses.

    The most important thing to keep in mind when purchasing funeral insurance is to do the math and make sure that you won't end up paying more in premiums over the course of your life than the amount that the policy will pay out to your estate when you pass away.

    According to a report that was published by ASIC in October 2015, eighty percent of funeral policies are terminated. The report also found that the cost of premiums was the most common reason given for terminating an approach.

    In addition, the insurance provider was able to reverse one third of the cancellations, or 35 percent, because the customer had simply stopped paying their premiums. Peter Tziotzis Orthodox Funeral Directors are here to help make the funeral process as smooth and stress-free as possible for you and your loved ones.

    Because of this, we make it a point to emphasise that funeral insurance is not right for everyone, and it is critical to check that the policy's coverage and premiums are commensurate with what you require for your own funeral.

    Funeral Insurance Costs a Lot in the Long Run

    You keep paying for funeral insurance until you die. If you're considering a funeral insurance plan, think about:

    • It is possible that the total amount you will pay over the next 10, 20, or even more years will be significantly higher than the price of the funeral.
    • Your anticipated future income — It's possible that you won't be able to afford the Age Pension premiums.
    • After you reach the age of 50, your premiums are guaranteed to increase, and they will continue to rise every year in line with inflation.
    • There are numerous variations among funeral insurance policies. Before you make a decision, shop around and get multiple quotes for funeral insurance.

    Pros and Cons of Funeral Insurance

    insurance 2

    Pros

    • Coverage immediately, but with certain restrictions — The majority of policies will only cover accidental death in the first few years of coverage.
    • Helps people who have trouble saving — it could be a good option for you if you are unsure of your ability to put money aside for funeral expenses.

    Cons

    • The premiums you pay could end up being significantly higher than they were when you first got coverage, especially after you turn 50. When you're living off of a pension, gratuities might become out of your price range.
    • You will not receive a refund on any premiums you have already paid. If you decide to cancel your policy or if you are unable to pay the additional costs, you will most likely forfeit the money you have already paid in premiums.
    • It's possible that the cost of your premiums will exceed the price of your funeral: If you continue to live for another five to ten years, it's possible that the total cost of your premiums will exceed the price of your funeral.
    • During the first few years of coverage, certain conditions are not covered, and if you pass away from a terminal illness during those first few years, your family may not receive any benefits. Examine the provisions outlined in the insurance policy.
    • It may take some time for your family to receive the payout from the insurance policy in order to pay for the funeral expenses; you will not receive the money immediately.

    Cost of a Funeral

    No one enjoys having the conversation about funerals, but it is a conversation that everyone needs to have in order to protect your family from the immediate costs they may be faced with when you pass away.

    Since few of us pre-plan our funerals, the question arises: who will be responsible for footing the bill when we pass away, given that the average cost of a funeral in Australia ranges from $4,000 to $15,0001?

    It's possible that the costs will be higher than you expect, regardless of whether you choose burial or cremation, a simple service or a more traditional rite.

    Factors That Have an Influence on Funeral Costs

    Depending on the way you wish to be remembered and your family's particular needs, the factors that are likely to influence the cost of a funeral include:

    • if you are going to be cremated, the cost of an urn, flowers, and a funeral director; if you are going to be buried, the cost of a burial plot, including preparation, casket, headstone, transportation, and council fees; if you are going to be buried, the cost of a funeral director; if you are going to be cremated, the cost of an urn; if you are going to be cremated, the location of the funeral or memorial service
    • Expenses not directly related to the funeral, such as the obituary and death certificate.

    What Is the Average Cost of Funeral Insurance?

    The cost of funeral insurance will vary depending on the following factors:

    • the amount of the benefit that you would like to have paid out to your family; this can be any amount between $3,000 and $15,000; your age at the time that you purchase the policy
    • How long you have been a policyholder – if you have Seniors Funeral Insurance, once you reach the age of 85, you are no longer required to make premium payments in order to remain covered!

    Did You Know

    Because your premiums with Australian Seniors will not go up on an annual basis, you will have an easier time keeping track of the growing cost of your funeral insurance policy as you get older.

    When determining how much funeral insurance you require – which is important to do because it will have an impact on the price of your funeral insurance – you need to think about the aspects of your funeral that are important to you.

    Funeral Expenses Breakdown

    Depending on a variety of external factors, the costs associated with organising a funeral might end up being higher for your family than you had originally planned for.

    The following costs may be incurred when planning a funeral or other ceremony to celebrate the life of a deceased person:

    The Average Costs of a Funeral

    • Service Fee More Than $2,000 Body Removal Cost $300
    • Maintenance 210 dollars
    • Cost per Car: $330 Clergy Fees: $275 Organist Fees: $275 Advertising Spending: $285
    • Up to a ten thousand dollar coffin
    • Flowers cost more than $3,500, while the chapel fee is only $180. $100 TOTAL $7,455 excluding the cost of the casket

    Ways to Pay for Your Funeral

    Funeral Insurance

    Regardless of how much you have contributed in premiums, if you have funeral insurance, your loved ones will receive a lump sum payment to put towards your final expenses.

    They are able to make use of this payout to cover the costs associated with your funeral as well as settle some of your unresolved financial matters, such as debts incurred from credit cards, loans, or bills.

    The lump sum benefit from Seniors Funeral Insurance can range anywhere from $3,000 to $15,000, and the exact amount is determined by the amount of coverage you choose.

    When you reach the age of 85, you will be eligible for an additional 25 percent Bonus Cover to assist with any new funeral arrangements that may become necessary. In addition to this, you won't have to make any payments to maintain your coverage.

    If your passing was the result of an accident, the payout to your family will be increased by a factor of three. You and your family are free to put the money you receive towards any expense, including those associated with the funeral, if you so choose.

    Pre-Paid Funeral Plans

    You can plan and pay for your own funeral in advance through something called a pre-paid funeral plan. This is typically done with the assistance of a local funeral director.

    In order to ensure that all of the arrangements and providers for your funeral are finalised at the time that payment is made, this requires careful planning.

    • Arrangements and payments for your funeral must be made in advance.
    • The particulars of your funeral service have been arranged.
    • Fixed costs at current funeral prices.

    The best way to manage funeral costs is to pre-plan. To learn more, see our information on Prepaid Pre-Planned Funeral options.

    Personal Savings

    This entails putting money aside on a consistent basis in a savings account for the purpose of paying for one's final expenses.

    It means that your family will only be able to access the amount of money that you have been able to save up during that period of time, and it is possible that they will not be able to access the account right away after your passing.

    • To consistently save money, you must first develop the necessary self-discipline.
    • Your loved ones will only be able to spend the money that you have been able to put aside.
    • It's possible that you won't have immediate access to the funds to help pay for your funeral costs.
    • Others
    • When you pass away, your superannuation fund will pay out the balance of your account to whoever you have designated as beneficiaries or to your estate. This is a process that can take some time.
    • Funeral bonds are a type of investment product that allow the funds to be withdrawn to pay for funeral expenses only after the death of the bondholder (may not be enough if funeral costs have risen in the meantime).

    Types of Funeral Insurance Premiums

    There are in fact two distinct approaches to premium pricing that are available for funeral insurance, and these are known as level premiums and stepped premiums respectively.

    With stepped premiums, the annual premium will increase in cost as you get older, reflecting the increased likelihood that you will experience an insured event such as a disability or death.

    Stepped premiums could end up costing more than the benefit they provide, meaning that they might not offer consumers good value for their money.

    When you have level premiums, it means that the annual premium may be more expensive when you first start the policy, but it is determined by your age when you begin the policy, and it does not change as you get older.

    Only an increase equal to the rate of inflation is applied to level premiums (known as "indexation").

    When looking into insurance, make sure to keep an open mind. Prior to purchasing a policy from them, it is important for you to confirm that the premiums will remain stable even if the cost of coverage rises at a rate that is higher than the rate of inflation each year.

    What Does the Average Funeral Cost?

    It all depends on whether you want to say your goodbyes in private with just your family or throw a lavish party for all of your friends and loved ones before you say your final goodbyes.

    In reality, the prices can range widely depending on the cultural expectations of various groups. For instance, a Jewish funeral is a straightforward and uncomplicated event, which is the exact opposite of what happens at an Italian funeral.

    Burial Vs Cremation

    As a result of the decreasing availability of land in Australia's capital cities, the costs associated with burial and funerals have been increasing at an exponential rate.

    It's possible that some Australians will discover the benefit from their funeral insurance policy is not sufficient to cover the costs of their funeral.

    Your decision regarding whether or not to cremate a body or have it buried will determine which option costs more. The costs of ceremonies in Australia can range anywhere from approximately $4,000 for a simple cremation to $15,000 for a funeral service (ASIC).

    The disparity between the costs and availability is reflected in the fact that cremations now account for approximately 70 percent of all funeral services in the major cities of Australia. And when it comes to personal preference, two out of every three Australians choose cremation over burial (McCrindle Research, 2014).

    Budget Funerals

    The University of Sydney Business School published a report in May 2017 that found the average national price of a budget funeral ranges from $4,132 for services purchased online to $5,646 for services purchased directly from funeral directors. The report was based on the findings of a survey that was conducted in April 2017.

    Funeral Costs Vary by Location

    Gathered Here estimates that the typical expense of a burial in Australia is somewhere in the region of $19,000. (including the monument and cemetery fees). However, this is dependent on where you would like to be laid to rest.

    For instance, prices have increased by a factor of two over the course of the last five years in Sydney, where the going rate for a cemetery plot can range anywhere from $4,000 to $52,000.

    Can Life Insurance Be Used to Pay for Your Funeral?

    In the same way that funeral insurance provides a one-time payment, life insurance benefits are distributed in the form of a lump sum. Because of this, the beneficiary has complete autonomy over how the payout is spent.

    It is essential to note, however, that the payout from life insurance can take significantly longer than the payout from funeral insurance. If this occurs, the payment may be received after the funeral has already taken place.

    Let's say you make the decision to use your life insurance to cover the costs of your funeral. If this is the case, you owe it to your beneficiaries to let them know that they will be responsible for paying the upfront costs of your funeral and that your life insurance will be used to reimburse the costs that have already been incurred.

    Let's say you and your loved ones would feel more at ease knowing that they won't have to worry about coming up with any money to cover your funeral expenses after you're gone. In this scenario, purchasing life insurance alone is not enough; you should also look into purchasing funeral insurance.

    What Happens to Debts When You Pass Away?

    insurance 3

    The type of debt you have and the circumstances surrounding your death will determine who is responsible for paying off your debts when you pass away. In most cases, you can expect to be asked the following sorts of things:

    • Do you have any assets (money or property) that you want to leave behind?
    • What kind of debts do you have, secured or unsecured?
    • Have the obligations been guaranteed by anyone?
    • Are the debts solely in your name, or do you share responsibility for them with someone else?

    Let's say that a deceased person leaves behind unpaid bills when they pass away. When this occurs, it is the responsibility of the executor to distribute the assets of the estate and pay off the debts using cash, if there is enough of it, or to sell the assets of the estate in order to generate enough money to pay off the debts. Peter Tziotzis Orthodox Funerals is here to assist you in making each funeral and cremation services a unique and moving memorial to your loved one.

    In the event that there is not enough money in the estate to pay off the debts after the sale of the assets, and in the event that the debt is not:

    If the debt is either guaranteed by someone else or secured against a specific asset that is owned by someone else in joint name with someone else, then it is possible that the debt does not need to be paid.

    What to Look for in a Funeral Insurance Policy

    If you are thinking about purchasing funeral insurance, some important considerations include the following:

    that your premiums will not increase on an annual basis, that you will be covered for death and terminal illness, and that claims will be paid out to your loved ones as quickly as possible.

    Could You Be Underinsured?

    A person who has a funeral insurance policy that provides a maximum benefit of $15,000 or less may be able to afford a traditional cremation service or a low-cost funeral service. However, even with the proceeds from the funeral insurance policy, they were not able to afford the typical burial-type funeral, which costs $19,000.

    Canstar conducted a survey of funeral insurance providers in 2017 to gather information about the average sum of coverage for Australian customers.

    We found that the average sum insured can be somewhere between $7,500 and $8,500 for clients who are in their 50s, but for clients who are in their 60s, the sum insured is likely to be much lower at $6,500. This was based on the findings of our survey.

    This average sum insured is quite concerning given the information presented above, which indicates that it would only just cover the costs associated with a low-cost funeral and the related expenses.

    However, for those who are financially unable to pay for a low-cost funeral, it is possible to satisfy all of the regulatory requirements for the disposal of a body for only $1,200.

    It is important to remember that the purpose of taking out funeral cover is typically to provide the insured with peace of mind that if they were to pass away, their family or loved ones would not be left with a hefty bill for the funeral and related costs. Selecting a policy that pays a small amount of benefit upon death may be cheaper than opting for a more extensive cover amount when selecting the right level of cover to sign up for. However, it is important to remember that selecting a policy that pays a small amount

    How to Avoid Paying More in Premiums Than Your Funeral

    When you pass away, the benefit from most funeral insurance policies is typically paid out to your beneficiaries in the amount of $15,000.

    The majority of people who buy insurance later than they should and later come to regret their decision, cancelling their coverage after only a few short years and, as a result, throwing away the money they've already spent on premiums.

    Because of this, we highly recommend that consumers do the math about how much they could pay in premiums from their current age to their anticipated "end date" before purchasing any kind of funeral insurance policy. This is something they should do before purchasing any kind of funeral insurance policy.

    The good news is that the majority of insurance companies offer a guaranteed benefit, which ensures that the total amount of your premiums will never exceed the amount that you are covered for.

    Some other service providers will let you pay higher premiums than the amount of coverage you have, but when you pass away, they will reimburse your estate for any "excess" payments you made that were made in excess of the amount of coverage you had.

    It is important to evaluate all of your available choices to determine which strategy would be most beneficial to your financial situation over the course of your lifetime.

    Cheaper Ways to Cover Funeral Costs

    There are probably some less expensive ways that you can assist your family in paying for your funeral. Consider the following options as replacements for funeral insurance:

    • a pre-paid funeral
    • a way to save for your funeral using a high-interest savings account and a funeral bond that uses your superannuation as collateral.

    Who Pays for Your Funeral Costs?

    When making arrangements for your funeral, it is important to keep in mind that the financial burden of paying for your funeral will typically fall on the surviving members of your immediate family.

    At a time when they are already going through emotional anguish, the costs associated with the funeral, including the casket, the flowers, the funeral director, and the burial fees, can add up to be a significant burden financially for your family.

    These costs can average between $4,000 and $15,0001, so it's worth thinking about who will be left with the bill. Peter Tziotzis Orthodox Funerals will always find creative ways to pull costs in line with your budget.

    Funeral Insurance can give you and your family complete peace of mind by helping to cover your funeral and other final expenses.

    Scroll to Top