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6 Things You Didn't Know About Prepaid Funerals

Thu 19th May 2022

Setting aside money for large expenses is a smart move in anyone's book and a funeral is much the same. To understand how prepaid funerals work and help you find the best option that's right for you, there are a few things you need to know.

What is a prepaid funeral?

A prepaid funeral is a contract made with a funeral provider for a funeral that has been paid in advance. There are a couple of ways to do this depending on the cost of your funeral service and your financial situation. Plans can either be paid up front or through a payment plan over an agreed period of time.

A prepaid funeral is for people who want to spare their family members additional stress when they are already grieving by pre-arranging their own funeral. It also allows people to plan how they want to say goodbye by designing a farewell that is unique to them.

What does a funeral cost?

A funeral in Australia can cost anywhere between $4,000 for a cremation to $15,000 or more for a traditional burial funeral.  A funeral can include: funeral director fees, death certificate, transport, coffin, service car, burial or cremation, cemetery plot, flowers, newspaper notices and wake.

What does a prepaid funeral cost?

A prepaid funeral should be close to what you would pay for a funeral today. Additional administration fees may apply, but the paying off of the agreed contract should remain much the same.

A prepaid funeral like any funeral will vary between providers. They will also vary depending on your customisable choices, for example a burial or cremation or whether you include a wake or not. Further variables include the addition of transport and government fees which will be different depending on your location within Australia.

With basic day to day living costs in Australia on the rise, so too are funerals. A prepaid funeral allows you to secure the current price at the time you sign your plan and won't increase over time.

Prepaid funeral vs funeral insurance

  Prepaid Funeral Funeral Insurance
Payout Money secured in a prepaid funeral plan will be held in a funeral fund under your name until it is needed to pay for the funeral Gives your family a large payout of which they can use towards funeral and other associated expenses
Can be used Limited, usually can only be used with the funeral provider it was purchased from Flexible, to spend anywhere on anything
Cost Costs are fixed at today's prices and won't increase over time If at any point you stop payments, your policy could be cancelled and usually no refund of premiums paid to date
Complexity A lot of details required which can make the process very involved, then it's brought together in a legally binding contract Very easy to set up. Application process usually requires no medicals, a very simple process
Choice You have the flexibility to prepay your funeral and leave final instructions, taking all burden away from your grieving family No requirement that the money must be used to pay for your funeral, the beneficiary determines how the insurance money is spent

Funeral benefit agreement

To help consumers safeguard their money, Australia's funeral plan industry is more heavily regulated than ever before. However, as with any investment you should always do your homework. Make sure you read your funeral provider's contract in full and make sure you understand the details before you sign any client care statements, funeral benefit agreements or disclosure statements. You should request a copy of the contract and seek advice from a close family member or financial adviser before signing it. Don't be pressured by anyone to rush these matters.

Make sure you let your next of kin know

To make the process for your family as stress free as possible, it is important to share with them any funeral plans or contracts you have - this might extend to include hospital staff and aged care providers. A copy of the contract should also be given to your next of kin and filed with your Will. Clear communication is paramount in all matters associated with your end of life affairs, in doing so will help take some pressure off your family during their time of grief.

More information

To ensure you are protected, check that your funeral provider will safely secure your money in a registered funeral fund in your state. The ACT and Northern Territory have fewer protections so your circumstances may need to be considered if in these territories.

Planning your own funeral can be met with mixed emotions, however knowing you can make a deeply stressful time less stressful to those you love is enough to make anyone consider whether a prepaid funeral plan is right for them.  

If you need further advice on planning a funeral or are looking for grief support, you can find more articles in our support and advice section here.