Funeral insurance provides a lump sum (typically $5,000-$15,000) to cover funeral and burial costs when you pass away. It offers guaranteed acceptance regardless of health, level premiums, and immediate coverage, though it's often more expensive than equivalent term life insurance.
Funeral insurance is a specialised form of life insurance designed to cover funeral, burial, and end-of-life expenses. It is also called burial insurance or final expense insurance.
Policies typically provide coverage between $5,000 and $15,000, reflecting average Australian funeral costs of $8,000 to $15,000.
Funeral insurance is structured for accessibility:
Funeral insurance is marketed primarily to older Australians (50+) who may:
Funeral insurance is often significantly more expensive than equivalent term life insurance on a cost-per-dollar-of-cover basis. Premiums paid over time can exceed the benefit amount, particularly if you live many years beyond taking out the policy.
ASIC has raised concerns about funeral insurance affordability and value, leading to industry reforms including clearer disclosure of total potential premium costs and benefit amounts.
Options that may offer better value include:
Benefits are generally paid quickly (within days) to beneficiaries, facilitating immediate payment of funeral expenses. Coverage typically includes:
Margaret, 68, purchases $10,000 funeral insurance with $45 monthly premiums. When she passes away at 73, the insurance has cost $2,700 in premiums but pays $10,000, covering her funeral costs without burdening her children
John, 72, takes out $8,000 funeral insurance and lives to 92, paying premiums for 20 years totaling $10,800 - more than the benefit amount. He could have saved money by investing in a savings account instead
Linda, 65, with significant health issues unable to get standard life insurance, secures $12,000 funeral insurance with guaranteed acceptance, ensuring her funeral costs are covered despite her pre-existing conditions
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