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Funeral Insurance
Funeral Insurance
Written by
Madeline Pettet
Edited by
Laura Crowden
Reviewed by
Adrian BennettEasily compare life insurance quotes
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What is funeral insurance?
Long story short
A funeral insurance policy could help your loved ones pay for your funeral
The policy payout could help cover costs like your coffin and burial or cremation.
The average cost of an attended funeral in Australia in 2022 was $8,7451ABC News – Funeral prices show the cost of dying varies but does not have to be expensive
Funeral insurance benefits usually range from $5,000 to $15,000 to accommodate both basic and more elaborate services.
Funeral insurance isn’t the only way to pay for your funeral
Other options include funeral bonds, prepaying a funeral director, or life insurance with an advance funeral benefit.
What is funeral insurance?
Planning for your own funeral may be an intimidating task. It can be difficult to imagine how our loved ones will manage without us, or we may not want to picture their heartbreak.
While it might not be something you want to think about, knowing you’ve put in place financial arrangements for your funeral can give you comfort that planning your farewell will be just that little bit easier for your loved ones.
Funeral insurance is just one way to financially plan for your own funeral. A little like life cover, with funeral insurance you pay a regular premium and, in return, when you pass away your beneficiaries receive a lump sum payment or benefit.
However, unlike life cover, funeral insurance is only intended to help cover your funeral expenses, like your coffin and burial or cremation, rather than a range of bills.
Typically, you’ll see funeral insurance benefit options ranging from between $5,000 to $15,000. This could help give you peace of mind that your family will have a little less financial stress to deal with during an already difficult time.
What is the benefit of planning for my funeral?
While it might not be easy, you may find planning for your funeral a reassuring process. Outlining your wishes can help those close to you understand how you’d like your life to be celebrated. It can also give you peace of mind that no one will be put in the uncomfortable position of guessing what you may have wanted.
If your planning includes deciding between cremation or burial, picking a casket or urn, or even flower arrangements, you can also begin to put together how much your funeral may cost. From there, you can make things easier for your loved ones by covering your funeral costs, including through funeral insurance.
What are the pros and cons of funeral insurance?
There are pros and cons to everything in life, and funeral insurance is no different. However, depending on your circumstances, you may view some pros or cons as more important than others.
Pros of funeral insurance
- It may offer immediate cover: You may not need to hold the policy for a set length of time before you’re eligible for benefits. Exclusions may apply, however.
- It could be an alternative to saving for funeral costs: If you’re someone who struggles with the self-discipline not to dip into your savings, then having your funeral insurance premiums automatically deducted might be a more convenient option.
- The benefit may help cover your funeral expenses: Funeral costs can range from $4,000 to $15,000,2Moneysmart – Paying for your funeral with the average attended funeral in Australia in 2022 costing $8,745.3ABC News – Funeral prices show the cost of dying varies but does not have to be expensive Meanwhile, funeral insurance benefit options tend to be between $5,000 to $15,000.
- You can shop around and compare: There’s more than one funeral insurance option out there, so you can look for a policy that offers more of what you’re after. You may like to gather a few funeral insurance quotes and review any policy documents before making a decision.
- Commonly offered with guaranteed acceptance: unlike some types of life insurance, funeral insurance may be offered without any consideration of your medical history, age, occupation, health status or other factors.
Cons of funeral insurance
- You may pay more in premiums than what you get as a benefit: Depending on your premium and when you take out funeral insurance, you may end up spending more on premiums during your lifetime than what the policy pays out upon your death.
- Your premiums will often go up over time: Age and market factors mean that your premiums are likely to increase. You may want to consider this when thinking about your budget.
- Immediate cover may only apply to certain causes of death: Generally, you’re only immediately covered for accidental death. Your policy may not cover terminal illness until you’ve held it for a few years.
- Your family may not receive the money immediately: The insurer will need to process your claim, which can delay when your loved ones receive the lump sum. However, as of June 2024, 94% of funeral insurance claims were processed within a fortnight, if not sooner.4Australian Prudential Regulation Authority – Life insurance claims and disputes data
- There may be age, health, and other restrictions: These restrictions may limit your cover or affect the cost of your premium.
Helpful tip
Did you know there are two types of funeral insurance? Funeral life insurance and funeral expenses insurance.
Funeral life insurance lets you choose the benefit amount, like $10,000, to be paid to whoever you choose when you pass. They can then use those funds to pay for funeral expenses as needed.
Funeral expenses insurance, on the other hand, pays funeral costs up to a chosen limit. This can mean your family needs to provide receipts to the insurer to receive the money, like claiming on your health insurance. If your funeral costs don’t reach the policy limit, your family doesn’t receive the leftover money.
Adrian Bennett
General Manager for General Insurance
How much does funeral insurance cost?
Like other types of insurance, different factors can affect your funeral insurance premium such as your age and gender.
Additionally, the amount of cover you choose – like a higher benefit amount – can change your premium. Both can impact the cost of funeral insurance increase time but in different ways.5For more information, see Financial Services Council – Life Insurance Premiums – Key Facts
Are there alternatives for funeral cover?
Funeral insurance isn’t the only way to pay for your funeral. Other options include:
Prepaid funeral
You may be able to pay for your funeral in advance, either paying the funeral director in one up-front payment or making a deposit followed by regular payments. Each state has their own consumer protections in case the funeral director goes out of business before you pass, but some may be more limited than others.
Funeral bond
This is an investment option where you pay a deposit followed by regular payments. Your money grows with interest over time but can only be accessed when you pass and to pay for your funeral costs.
High-interest savings account
Like a funeral bond, you can set up a bank account to regularly deposit funds into. This can offer flexibility if you need to use the money for something else, but it may require some self-discipline to keep it growing.
Life cover
If you have life cover, also known as term life insurance or death cover, your family could use some of the benefit payout for your funeral. They may need to wait a little while for the claim to be processed, though. Alternatively, your policy may allow for a small portion to be paid quickly to help with funeral expenses.
Superannuation
Your family may be able to access what remains of your superannuation, although they may have to pay for the funeral expenses upfront and then claim back once your will is final. In addition, you may be able to access your superannuation yourself early depending on your circumstances, like if you’re diagnosed with a terminal illness. Your superannuation may also include life cover.
How do I choose funeral insurance?
Before you look at funeral insurance, it may be helpful to think about your budget (now and in the future); what your preferred style of funeral may cost; and your current health, including any pre-existing conditions.
With these in mind, you can then shop around and compare policies by considering things like:
- features, including benefit options and if any additional perks or support is included for your family
- premiums, including if they’re variable age-stepped or level, and how they may change over time
- exclusions, like what causes of death or pre-existing health conditions are covered.
To get the full story, you may need to take the time to review the product disclosure statement (PDS), or you could reach out to the insurer for more information.
Frequently asked questions
Can I get funeral insurance if I have a pre-existing medical condition?
A pre-existing medical condition doesn’t necessarily prevent you from getting funeral insurance. However, it may mean your policy has additional exclusions and your premium increases.
Are there any waiting periods for funeral insurance?
Yes, although most funeral insurance policies will cover accidental death without a waiting period. Other waiting periods may differ between policies. For instance, your policy may not cover certain causes of death until you’ve held it for a set time. The PDS should outline any waiting periods that apply.
When should I get funeral insurance?
You know yourself and your health best. If you’re concerned that you may pass soon, it may be time to look into funeral insurance. For instance, you may have enjoyed many golden years but feel that they may be reaching their end. Alternatively, if you’re dealing with a serious health issue, you may find peace of mind in having funeral insurance sorted.
Before making any big decisions, though, you might want to consider the likely premiums and how much you would pay over time, especially if you live much longer than you expect. Remember, Australian men who were aged 65 in 2021–2023 have a life expectancy of 85.1 years, while Australian women of the same age have a life expectancy of 87.7 years.6Australia Institute of Health and Welfare – Deaths in Australia
Where can I find and compare life insurance?
iSelect and our partner Lifebroker do not compare funeral insurance plans, however funeral insurance is not the only option on the table to help cover the costs of your funeral. Life insurance, for instance, could help pay for your funeral, along with giving your loved ones some breathing room as they make the difficult transition to life after you’re gone. We can help you easily compare a range of life insurance options online, so you can get back to spending time with the people that matter.
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