Comparisonsmaster
How Funeral Plans Work In Australia
Related Topics (Sponsored Ads):
A funeral can typically cost between $4,000 – $15,000. There are many various components of a funeral, each of them with an expense. These include the obvious such as a burial plot, a coffin, a grave marker/headstone, funeral hall/chapel services, and funeral director fees. Other expenses can include flowers, limousine rentals, catering services and certain legal fees.
The following plans allow for these expenses to be paid for or arranged in advance and sometimes even to pre-arrange all the various details involved in a funeral.
A funeral can typically cost between $4,000 – $15,000. There are many various components of a funeral, each of them with an expense. These include the obvious such as a burial plot, a coffin, a grave marker/headstone, funeral hall/chapel services, and funeral director fees. Other expenses can include flowers, limousine rentals, catering services and certain legal fees.
The following plans allow for these expenses to be paid for or arranged in advance and sometimes even to pre-arrange all the various details involved in a funeral.
Pre-Paid Funeral Plans
This kind of plan is purchased directly from a specific funeral director or company. You select all the kinds of services you want, including type of coffin, headstone and other items. You then lock-in the cost for all of these by paying for them in advance. This is a big advantage, as it protects against rising costs. Often, this kind of plan can be paid for with installment payments, but still usually require an initial down payment.
A major disadvantage of this plan is that it is not “portable”. If you should subsequently move out of the area, this plan may be not be usable where you move to. Also, most of the time these plans are non-refundable. Another danger is that if the funeral company goes out of business, you may lose all your money and end up with no usable plan.
Funeral Protection Insurance
This is a specialized life insurance policy, where the death benefit payment is used to cover funeral expenses. This type of plan is not locked into a specific funeral company, so you have portability. Also, since insurance companies are well regulated, you are unlikely to lose your money. This type of insurance is available to everyone with no medical underwriting and is supposed to pay your beneficiaries quickly.
The big disadvantage here is that the insurance coverage amount is fixed and may not be enough to cover the actual expenses of your future funeral. Also, these policies usually have a one-year waiting period before covering a death due to illness. Plus, the monthly premiums can go up as you age.
Funeral Bonds
This is actually an investment vehicle used to provide for future funeral expenses. They are available from insurance and investment companies. Like an insurance policy plan, they are portable and are protected by government regulations. You select the value of the bond and you pay for it upfront or in installments.
Here as well, you have no protection from inflation – the bond amount may not be sufficient. If you have not finished paying the installments when you die, your family will not get the full value of the bond.
