Ways to pay for your funeral
Funeral insurance pays your loved ones a lump sum to use towards your final expenses, regardless of how much you’ve paid in premiums. They can use this pay out to cover your funeral costs and to settle some of your outstanding financial affairs, such as credit card debts, loans or bills. Read more about funeral insurance.
Seniors Funeral Insurance pays a lump sum benefit of $3,000 up to $15,000, depending on the amount of cover you have selected.
- With our Top Cover, receive your covered amount, or all of the premiums you’ve paid in – whichever is greater.²
- The money can be used for any need.
Pre-paid funeral plans
A pre-paid funeral plan is one where you plan and pay for your funeral upfront before you pass away, usually through a local funeral director. This requires careful planning to ensure all arrangements and suppliers for your funeral are finalised at the time of payment.
- Upfront planning and paying for your funeral.
- Details of your funeral service are locked in.
- Fixed costs at current funeral prices.
Learn more about the difference between funeral insurance and pre-paid funeral plans.
This involves putting money away regularly in a savings account to pay for your funeral expenses. It means your family will only have access to whatever amount you’ve managed to save in that time, and they may not be able to access the account immediately after your death.
- Personal discipline is needed to save regularly.
- Your family will only have access to whatever amount you’ve managed to save.
- The money may not be immediately accessible to help pay your funeral expenses.
- Superannuation - when you pass away, your super fund pays out your balance to your beneficiaries or your estate; a process which can take some time.
- Funeral bonds - an investment product where the funds can only be withdrawn after your death to pay for your funeral (may not be enough if funeral costs have risen in the meantime).
Can life insurance be used to pay for your funeral?
As with funeral insurance, life insurance is given as a lump sum payment and as such it is at the discretion of the beneficiary as to what they use that payout for.
However, it’s important to note that life insurance can take longer to pay out than funeral insurance, in which case the payment may be received after the funeral has occurred.
If you choose to use life insurance as the way to cover your funeral expenses, you should advise your beneficiaries that the upfront cost of your funeral will need to be managed by them, with your life insurance then used to reimburse the costs incurred.
If you would prefer for your funeral costs to be covered upfront, with no out of pocket expenses required by your family when you pass, then funeral insurance is worth considering in addition to life insurance.
What happens to debts when you pass away?
The responsibility for debts when you pass away will depend on the type of debt, and your personal circumstances. Generally, the following questions will be asked:
- Are there any assets (money or property) in your estate?
- Are the debts secured or unsecured?
- Has someone guaranteed the debts?
- Are the debts in your name only, or jointly with another person?
If when a person passes away there are outstanding debts, the executor is responsible for dividing up the estate and paying off the debts using cash if there is enough, or selling the estate assets for cash to pay off the creditors.
If there is not enough money in the estate to pay off the debts once the assets are sold, and if the debt is not:
- secured against a particular asset that is owned by someone else
- in joint name with someone else, or
- guaranteed by someone
then the debt may not need to be paid.3
What to look for in a funeral insurance policy
When considering funeral insurance, you want to make sure of the following:
- that your premiums do not increase as you age
- you don’t pay more in premiums than your family will receive when you pass away
- that your policy is paid in a prompt manner to ensure your family is not out of pocket when organising your funeral.