Funeral insurance 101: We’ve got you covered

Planning for end-of-life expenses isn’t the most palatable topic for most people, but it is something you need to think about. Taking the time to get organised early can help with peace of mind – not only for you but also your loved ones.

Funeral insurance is one way to create a financial safety net so that your family isn’t burdened with even more stress during an emotional time. So read on to learn all about funeral insurance, as well as what you need to think about when searching for the right policy.

Key features of funeral insurance policies

With funeral insurance policies, if a beneficiary is listed, they will receive a lump-sum payment to cover funeral expenses. What this essentially means is that your loved ones won’t be left having to pay for lots of bills when they are trying to grieve. Here are some features of a standard funeral policy:

• Flexible cover amounts: Depending on the policy you take out, your family could be entitled to as much as $15,000 if you pass away, or if you are diagnosed with a terminal illness (with less than 12 months to live).
• Guaranteed acceptance: Many policies accept applicants within a specific age bracket – to be eligible for Guardian Funeral Insurance, you have to be an Australian resident between 40-79 years old.
• Early cashout: Some funeral insurance policies stop requiring you to pay premiums after you turn 85 while allowing you to keep your policy in place (until you turn 100). Otherwise, you might be offered an early cashout option to get 75% of your benefit amount and end your policy.
• Other premium and cover options: Some policies let you choose between stepped premiums (which increase with age) or level premiums (which stay consistent), allow you to choose between single or joint cover as well as options to pay fortnightly, monthly or annually.

What is the process of taking out a funeral insurance policy?

Taking out a funeral insurance policy is very straightforward. Here’s how it works:

1. Look at your own needs: Figure out the level of cover you require based on funeral costs in your area. The average funeral in Australia costs just under $9,000, but could be as low as $4,000 and as high as $15,000 or more depending on what’s involved.
2. Compare policies: Research and compare policies from different insurers to find one that suits your needs and budget. Pay close attention to the benefit amount, premium structure and any exclusions in the policy.
3. Complete an application: Most insurers let you apply online, over the phone or in person. You’ll need to give personal details like your age and cover preferences, while some might even ask about your smoking status or even pre-existing health conditions.
4. Understand any waiting periods: Many policies include a waiting period for natural death claims, often between six to 12 months. However, accidental death is typically covered immediately.
5. Pay premiums: Once your application is approved, you’ll start paying premiums regularly, usually monthly, fortnightly or annually and you’ll be covered.

The benefits of funeral insurance

One advantage of having funeral cover is the financial relief it provides for your loved ones. Losing a family member is emotionally taxing, and funeral insurance means they may not have to face additional financial stress during this difficult time. Funeral insurance provides peace of mind and helps reduce stress by ensuring that financial arrangements are in place to cover funeral costs.

The quick payout of most funeral insurance policies is another major plus. Most insurers process claims within a few days of receiving all the necessary documents, so families can start making funeral arrangements without delay. Funeral insurance is accessible to most people as it doesn’t require an upfront lump-sum payment like pre-paid funeral plans.

Key considerations when choosing a policy

When comparing your options for a funeral insurance policy, here are four factors to consider:

1. Premium costs over time: Be mindful that stepped premiums increase as you age, which could make the policy more expensive in the long run. It could be handy to calculate the total premiums you’ll pay over time to make sure they aren’t higher than the policy’s benefit amount.
2. Exclusions: Carefully review the exclusions outlined in the Product Disclosure Statement (PDS). Some policies, for example, don’t cover specific causes of death during the waiting period.
3. Missed payments: If you fail to pay premiums, your policy could lapse. Check if the insurer has a grace period or other flexible payment arrangements to avoid losing your cover.
4. Age limits: Make sure you’re within the eligible age range for the policy and that it will give ongoing cover as you get older.

How to find the right funeral insurance policy

Finding the right policy involves research, reflection and sometimes professional advice. Start by comparing providers online to evaluate all your options based on levels of cover, premiums, benefits, exclusions and terms. You could also look at customer reviews to get insights on the reliability and claims processes of various insurers.   

Understanding the policy details is so important. Take the time to read the PDS thoroughly, and if you’re unsure about any details, don’t hesitate to ask questions or speak with a financial advisor.

If you're ready to explore Guardian Funeral Insurance, our team is here to help. Request a quote today to see whether it suits you and your family’s needs.