Funeral Insurance

What is Funeral Insurance?

Funeral Insurance pays a lump sum benefit to assist with the cost of a funeral and other final expenses such as any small bills or outstanding debts. In Australia, the average cost of a cremation service is between $4,500 and $5,500 and a burial service is between $6,500 and $7,500 although a funeral can cost up to $15,000 or more depending on your circumstances and personal preferences. Covering this cost can be tricky for the surviving family members, especially as it generally needs to be paid immediately. 

With Funeral Insurance your application is almost always guaranteed to be accepted regardless of your health, lifestyle or occupation provided you meet the simple eligibility requirements. However, because there are no medicals or health questions there is usually an initial period where a benefit will only be paid for death due to an accident.  This is known as the Accidental Death Period and generally applies for either 12 or 24 months. After this, the cover is expanded to include death due to any cause.

Funeral Insurance may be offered with a choice of premium types – Stepped or Level.


Why might you need Funeral Insurance?

If you don’t think your family would be able to meet this cost or you don’t want them to have to worry about it, funeral insurance may be something to consider. There are other options to meet the cost of a funeral such as funeral bonds, a pre-paid funeral or setting up a dedicated savings account. One of the advantages of funeral insurance is that the full benefit amount is payable straight away, usually within 24-48 hours of the claim being made.

What’s the difference between Stepped and Level premiums?

The premium that you pay is recalculated each year based on the amount of your benefit and the premium rate applying at the time.

With “stepped premiums” the premium rate is initially based on your age when you first take out the cover. This rate will then generally increase each year based on your age at the time, with the increases being greater at older ages.

With “level premiums” the premium rate on the benefit amount you chose at the start of your cover doesn’t change as you get older.  With this option you pay more for your cover than with stepped premiums to start with but at older ages your premiums will be considerably cheaper.