The Benefits of a Funeral Insurance Plan
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UPDATED: Mar 13, 2020
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A funeral insurance plan is important to have in one of life’s most painful moments. Funeral insurance is a type of insurance policy you take out to pay for the cost of your funeral. It involves paying ongoing amounts of money, normally called “premiums”, that may or may not increase over time. Having a funeral insurance plan in place can be a helping hand for your family when you can no longer provide for them. When you pass away, your family will receive a lump sum payment they can use to cover any immediate expenses, such as a funeral service or outstanding debt.
Burials cost an average of $10,206 and cremation isn’t far behind at $7,316 on average.
Additionally, a funeral plan takes the financial stress out of the situation faced by your loved ones. Instead of worrying about money, they can concentrate on celebrating your life and the impact you made.
How does a funeral insurance plan work?
Much like other insurance policies, your fortnightly or monthly premium will be based on factors such as your age, smoker status, and level of cover that you choose. They may also take your health into account, such as cancer in your family history.
Cash payouts can be used to cover:
- Your funeral service
- Bills or expenses you leave behind
- Immediate mortgage or loan repayments
- Whatever your family needs at the time
The funeral service fee may include several of the following: burial fees, funeral director, cremation costs, flowers, catering, death certificate, celebrant, newspaper notice, casket, and venue hire fee.
What should I consider when buying a funeral insurance policy?
A funeral insurance plan is a positive step you can take towards financially protecting your loved ones during a difficult time. It’s an important consideration that your family will be ever thankful for.
When taking out a funeral insurance policy, consider the potential costs of the following when selecting your coverage:
- Funeral expenses associated with the type of funeral you want
- Your personal savings
- Other insurances you might have
- Government funeral grants available to you (up to $2,058)
- Personal loans or bills you may leave behind
- Your family’s financial situation
- What you can afford in fortnightly or monthly payments
How can I avoid disputes with funeral insurance?
Planning and appointing the right executor is crucial. An executor can have enormous power. Make sure you appoint someone who will stand up for your wishes and won’t be bulldozed by other family members. A close family member is usually best, but otherwise, an independent executor like a trustee company can offer the benefit of being impartial.
When it comes to communicating your wishes with your executor, whoever they may be, it’s important to be precise.
Make sure they understand your wishes and identify any conflicts. Put this in writing so there’s no ambiguity, such as your will or other supporting documents. This document should be legal and kept somewhere that can be easily found.
Alternatively, pre-pay your funeral with a local funeral provider and lock in now exactly what you want. You can also bring your family together to talk through the document so that everyone can get an understanding of your wishes, not just the executor.
Look, this might be a difficult conversation to have, and nobody wants to talk about a close family member dying. But it’s going to happen; it’s inevitable.
The most dangerous thing you can do is put off planning your final wishes, causing added stress during an already difficult time. Have those awkward talks, those uncomfortable discussions, and those tense decisions. Because when those final moments come, money should be the least of your family’s concerns.