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  1. Home
  2. Finance

How to pay for a funeral: funeral costs in Australia

Know your finance options before the funeral. - by Laura Barry
  • 26 Sep 2018
How to pay for a funeral: funeral costs in Australia
Getty

No one likes thinking about death. Unfortunately, this mindset means that many people don’t know how much a funeral costs, how to organise a funeral, or even how to pay for a funeral in Australia. Funerals are something of a taboo topic, and thanks to these cultural norms, families are often surprised by how much a funeral will cost and struggle to come up with the money, then end up paying much more than they would have if they had been prepared. 

Accoding to ASIC’s MoneySmart, Funerals in Australia can cost anywhere from $4,000 to $15,000 depending on whether they are simple or elaborate.

 

Jordana Wong is the co-founder of Gathered Here, a funeral comparison website, and she has some advice on how you can pay for a funeral.

“Planning a funeral can be a daunting and unfamiliar experience,” says Jordana. “We want to make sure families have the data they need to work their way through the process, and make an informed decision about their funeral purchase.”

1. PREPAID FUNERALS

  • A funeral that is planned, contracted and paid for in advance with a selected funeral director. It can be paid for in instalments (sometimes called a funeral plan).
  • Everything is taken care of in advance - deceased’s family is not financially burdened or unnecessarily stressed by having to make difficult decisions about the funeral when the time comes.
  • Cost is locked in at today’s prices, with no more to pay regardless of future price increases.
coffin in grave yard
Getty

2. FUNERAL BOND

  • A managed investment that helps individuals save for the cost of their funeral. There are 2 common types:
  • Monthly instalments funeral bonds: contribute minimum instalments each month to be invested along with other funds already paid.
  • Lump sum funeral bonds with optional top-ups: contribute a minimum lump sum and top up any time.
  • Funeral bonds let allow for planning financially for a funeral without having to plan all of the details (which many find confronting and emotionally harrowing).
  • However, there is no guarantee that the amount saved and earned under the bond will be sufficient to cover all funeral expenses when the time comes.

3. FUNERAL INSURANCE

  • Insurance policy that pays out a lump sum upon death to cover funeral costs.
  • Covered for the full insured amount from day one, with the exception that only accidental death is covered in the first 1-2 years of the policy.
  • 2 major risks:
    • Increasing premiums – Insurance can seem affordable at first, but as premiums increase, they can become unaffordable. This may also mean paying more in premiums than the cost of the actual funeral.
    • Forfeited policy - Policies can be cancelled when holder misses or cannot afford to make a payment. All premiums paid until that point are lost.
  • Before buying funeral insurance. you must be 100% sure you will always be able to cover the cost of premiums until death, factoring in inflation and price rises over time.

candle
Getty

4. PERSONAL SAVINGS/FUNDS

  • Pat for a funeral by using cash from a bank account, credit card, sold assets, etc.

5. DECEASED ESTATE

  • If sufficient funds are available, funeral expenses may be paid out of (or reimbursed from) the deceased’s estate.
  • It is common for the deceased to specify in their will how their funeral costs are to be paid.
  • Where an individual takes responsibility for organising a funeral, it is important that they do not pay for a funeral they can’t afford on the assumption that they will recover the money from the estate. The costs of a funeral cannot be recovered if there are inadequate funds in the estate, or if the deceased has no estate at all.

6. SUPERANNUATION

Superannuation may be used to pay for funeral expenses in 2 different ways:

  1. In certain (rare) cases, a person may be granted early access to their own superannuation fund on compassionate grounds in order to pay for a family member’s funeral - usually occurs where they have no other way to pay for the funeral. It is only permitted to withdraw an amount that covers reasonable costs such as the funeral service and headstone, and it is also possible that accessing superannuation early will have an effect on other payments received, such as child support and/or Centrelink.
  2. In other cases, where the deceased passes away before they retire, a death benefit payment is made from the deceased’s superannuation fund to eligible beneficiaries or the deceased’s estate. If paid to the deceased’s family members, they can put this payment towards the cost of the funeral.
Funeral flowers in black and gold
Getty

7. GOVERNMENT ALLOWANCES

  • There are a number of government allowances/payments available to people in particular circumstances to help pay for the cost of a funeral - e.g. bereavement allowances, widow allowances.
  • Most state governments in Australia have additional schemes to help in-need families with funeral costs. Generally, these programs require the family to show that they are unable to pay for funeral costs, and a fairly strict assets test that must be satisfied.

8. FUNERAL LOANS

There are 3 main ways to borrow money to pay for a funeral:

  1. Personal loans: Money borrowed from a financial institution for a personal expense. Generally a fixed amount to be regularly repaid over set term.
  2. Payday loans: High cost, short-term loans which often receive same day approval even with a bad credit score - very high interest rates and expensive default fees.
  3. Buy now pay later finance: A type of loan that enables customers to purchase funerals on interest-free finance - often with no extra interest/cost.

You might also like:

What you need to know about funerals in Australia

How to choose the right insurance for you

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  • Finance
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  • Better Life
Laura Barry
Laura Barry
Laura Barry is a writer, bookworm and interior design enthusiast with a love for reporting on all things homes, travel and lifestyle. When not tapping away at her keyboard, Laura can be found making endless cups of tea or perusing the shelves of Sydney’s many bookstores.

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YOU’LL NEED A WEDGE TO HANG THAT DOOR
Watch 6:32

YOU’LL NEED A WEDGE TO HANG THAT DOOR

{headline}

{headline}

How much a funeral costs & what you need to know about funerals in Australia

How much a funeral costs & what you need to know about funerals in Australia

The unusual items you need to include in your will

The unusual items you need to include in your will

This is Australia's Town of the Year for 2021

This is Australia's Town of the Year for 2021

The best big things to see in Australia

The best big things to see in Australia

{headline}

{headline}

The top 10 best holiday and water parks in Australia

The top 10 best holiday and water parks in Australia

8 best bed sheets available in Australia

8 best bed sheets available in Australia

This small Aussie town has become an Instagram tourist attraction

This small Aussie town has become an Instagram tourist attraction

{headline}

{headline}

Dr Harry meets the survivors of the bushfires

Dr Harry meets the survivors of the bushfires

You can now buy a hazelnut spread by Lindt

You can now buy a hazelnut spread by Lindt

Are introduced and invasive species harmful in Australia?

Are introduced and invasive species harmful in Australia?

Is the Tasmanian Tiger still alive?

Is the Tasmanian Tiger still alive?

5 plants that will attract native wildlife into your garden

5 plants that will attract native wildlife into your garden

Australia’s number one beach for 2020 has been announced

Australia’s number one beach for 2020 has been announced

Study identifies the best place to drive a car in Australia

Study identifies the best place to drive a car in Australia

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