Funeral insurance… the myth, the fable, the fine print. We’ve heard it over and over again yet people are still paying a hefty price.
It’s 2014, you’ve just turned 50 and you’ve made a decision to get funeral insurance so that your loved ones won’t be burdened with those expenses in the future (a long way in the future hopefully) when you die. You sign up with a $13 per fortnight premium on a $15,000 funeral insurance package and you feel good, knowing you’re covered.
Jump forward a decade, your 60th was a blast and you’re feeling better than ever. You decide to review a few things in your life and notice something interesting about that funeral insurance policy you started all those years ago. You realise that over those 10 years, your fortnightly premiums have gone from $13 to almost $40. You make a phone call and sure enough, they will keep increasing as you approach your 70s, 80s and 90s. You do the maths and realise that you will spend many times more than the policy will pay out.
It has been found that most people with funeral insurance will ultimately pay far more in premiums than the pay out. In some cases, people can end up paying over $100,000 for a $15,000 funeral policy. What’s the answer? Funeral bonds.
First of all, it should be said that if you are financially comfortable and you know that there will be enough money in the bank to pay for your funeral when you die, you don’t have to do anything. Australian banks will generally pay funeral expenses without a Will being executed. You will need a copy of the Form 9 – Cause of Death, provided by the doctor. If you are using a funeral director, they will have a copy.
But not everyone is financially comfortable, and the people buying into funeral insurance are the people that want things to be sorted… organised. And that’s where funeral bonds are a great option. Full disclosure, we sell funeral bonds and yes we charge an application fee for us to process that bond and maintain it, so naturally, you should do your own research. But we sell them because they are a great product. A set and forget kind of deal. They can be paid in one go or by instalments and once the contract price of the prepaid funeral is paid, that is it. No more to pay.
Here are some examples of what could happen with a funeral bond;
- A $3000 funeral bond is paid in full. At the time it is required, the bond is paid out to us and that is that. The family can feel rest assured that the funeral is delivered according to the pre-paid contract.
- A $3000 funeral bond is paid by instalments. At the time it is required, there is a shortfall of $1000. The balance is paid by the family or estate, and the funeral is delivered according to the pre-paid contract.
- A $3000 funeral bond is paid in full. At the time it is required, the funeral company is no longer in business. The funeral bond is still available to pay to the funeral director providing the service with any shortfall (if any) covered by the family or estate.
In short, a funeral bond is like a savings account just for your funeral. It doesn’t discriminate and can be paid off over a period of years if needed. In our opinion it is the best product you can assign to a pre-paid funeral contract. For more information or if you have any questions, get in touch.
Photo by imondryk
