How to know which payment option is right for your funeral

Funerals don’t come cheap but there are ways to reduce the financial stress. See what options exist and experts’ tips.

Patrick Tadros

@ptadros

3 min read

November 11, 2022 - 8:36AM

News Corp Australia

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Planning for a funeral can add further financial pain to an already highly stressful time.

And with average costs ranging from about $4000 for a basic cremation to around $15,000 for a more elaborate burial, providing an appropriate send-off doesn’t come cheap.

Gathered Here, Australia’s largest funeral comparison site, found the average cost of a funeral in Australia is $8274, including extras such as a family limousine, flowers and catering – and it’s forcing families to downsize.

“Our funeral directors tell us that they’re seeing a trend towards more modest funerals with a lower price-tag,” Gathered Here chief executive and founder Colin Wong says.

“Direct cremations, those without a service or any guests, are becoming more popular.”

While planning ahead and setting up a savings account for a funeral is key, other payment options include insurance, bonds or a prepaid funeral plan.

Whichever you decide, experts warn there are things you should know first.

Planning for a funeral can add further financial pain to an already stressful and emotional time.

BONDS AND INSURANCE

Funeral bonds – where you pay a deposit and then make regular payments – can be purchased through a funeral director or life insurer. The money is only used for a funeral.

Whereas funeral insurance gives your family a lump-sum payment to help pay for the funeral and associated expenses when you die.

Financial adviser James Gerrard says bonds operate similar to prepaid funeral plans.

“You can make payments on a regular basis, however there is an investment component with funeral bonds whereas prepaid funeral plans are simply helping you pre-pay the cost of a future service,” he says.

“Funeral bonds have fees and risks attached to them so it is important to read the product disclosure statement to make sure it is appropriate for you.”

Advice from ASIC’s MoneySmart suggests funeral insurance can “cost you a lot more than the benefit your family will receive”.

“If you stop making repayments, you lose what you’ve already paid,” an ASIC MoneySmart spokesperson says.

“Taking out funeral insurance may help people who struggle to save, but there can be big increases to your premium and it may become unaffordable.”

Guardian Plan pre-planning consultant Carrie Siipola-Fortunaso.

PRE-PAID FUNERALS

In an age of rising inflation, Guardian Plan pre-planning consultant Carrie Siipola-Fortunaso says prepaid funerals are a great way to protect your family from funeral costs.

“It is more personalised, as you get to plan your final farewell, and it can also be cheaper than funeral insurance, which involves paying premiums until you die,” she says.

“With funeral insurance, missing a payment can mean your cover lapses, and you aren’t protected from inflation. By prepaying you lock in today’s price, so you don’t have to worry about future price increases.

“Someone overcome by grief and with a limited amount of time to organise a funeral is going to be fairly limited in what they can plan. Make your funeral a comfort, not a burden.”

Wong recommends getting a clear breakdown of all associated costs and asking about a cooling-off period to avoid any penalties, in case you change your mind.

Marty Spargo, 40, opted for a prepaid funeral to farewell his grandfather.

“When my grandfather passed away, I was relieved that I had prepaid for his funeral. It was one less thing to worry about during an already difficult time,” he says.

“I know that he would have been happy with the arrangements, and I was glad that I could provide him with a dignified send-off.

“Prepaying for a funeral may not be something that everyone does, but it is something that I am glad I did.

“Not only did it give me peace of mind, but it also allowed me to focus on other things during a difficult time. It’s a good weapon against rising prices since prepaying for a funeral will protect you from the possible rise of funeral services in the future.”