How will you pay for your funeral?

Traditionally a taboo topic, funerals are a part of life. The death of a loved one is a stressful time, so planning ahead can help ease the burden on those left behind.
Traditionally a taboo topic, funerals are a part of life. The death of a loved one is a stressful time, so planning ahead can help ease the burden on those left behind.

Most of us only find out about funeral costs when we need to arrange the funeral of a family member or friend. Funerals can cost from $4,000 for a basic cremation to around $15,000 for a more elaborate coffin, burial and flowers.

Typical costs when arranging a funeral include funeral director fees, transport, a coffin, death certificate, permits, burial or cremation, a cemetery plot, celebrant, clergy, flowers, newspaper notices and a wake venue and refreshments.

If you have superannuation, your fund will pay out your super balance and any life insurance to your dependents or your estate upon your death. It may take some time for it to be paid out, so your family may need to pay upfront and be reimbursed once probate is granted. You may be entitled to funeral payments from the government or your trade union. 

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Pre-paid funeral plans allow you to choose and pay in advance for your funeral. Ask for a full description of the costs to see exactly what you are paying for and ‘shop around’ for a package you are comfortable with. Costs are fixed in today’s dollars, even if your funeral is not for many years, hence you can avoid inflation.

Funeral bonds are investment products that can help you save for funeral expenses. Money invested in burial plots, pre-paid funeral plans or funeral bonds (up to the Funeral Bond Allowable Limit) is not subject to the asset or income test for the age pension. You can pay in instalments but read the prospectus and understand the costs beforehand. If you die before the bond is fully paid for, you will only get what you have paid into the bond and any money earned on the investment. It won’t lock in funeral costs in today's dollars, so your family or estate may need to top up your bond to meet funeral costs if the returns are not enough.

Funeral insurance is a policy that will give your family a lump sum payment for funeral expenses when you die. Before you buy, consider that if something happens and you can't keep up with the payments, you may lose all the money you have paid towards the insurance.

  • Source: ASIC Moneysmart