How to Pay for Your Funeral Before You Die

Funerals can be a liberating experience, providing family and friends with that much needed sense of acceptance. But they aren't cheap. In Australia the average funeral costs between $4,000 and $15,000. If you're worried about the financial implications of your own death and want to relieve your family of the burden, there are numerous ways to pay for your own funeral.

Pre-Paid Funeral Plans

A pre-paid funeral plan allows you to pay some or all of the costs in advance and make your own arrangements. The primary benefit is that the costs are capped at today's rates, meaning your family (or estate) won't have to cover any extra costs that accumulate due to inflation. With a pre-paid funeral you pay all the fees to your chosen funeral director, either in full or by instalments. For most people, a pre-paid funeral plan is the best option. However, if you'd prefer to distance yourself from the logistics of the event or would like a more flexible agreement, funeral bonds or funeral insurance may be more appropriate.

Funeral Bonds

Funeral bonds are an investment that can only be taken out after you die by your chosen beneficiary. They are perfect if you'd like to cover the costs but leave the logistics to somebody else. Unlike a pre-paid funeral plan, services aren't arranged in advance, so the prices will not be capped; however, this approach does provide greater flexibility. The main con of taking out a funeral bond is that the investment may not move at the same rate as inflation. In addition, you can only withdraw what you invest; therefore, if the cost of the funeral exceeds your investment, your next of kin (or estate) must cover the remaining fees.

Funeral Insurance

With funeral insurance you can pay fortnightly or monthly premiums that will entitle you to a specific amount of cover that'll be paid directly to your beneficiary. In most circumstances, insurance premiums will rise after you reach the age of 50, even if you take out the cover beforehand. If you cancel your policy, any payments made up until that date cannot be recovered. While funeral insurance may seem cheap initially, after time it could end up costing far more than the funeral itself.

Due to the Competition and Consumer Act 2010, funeral directors must provide a full description of their costs. Before you take out any type of funeral cover, make sure you have all the details in writing.

For more information on funeral planning and payment options, contact a funeral home like Lee Adam Funeral Services.