Managing Funeral Costs: Tips and Options to Pay for Funeral

Losing a loved one is an emotionally difficult time, and the financial burden of arranging a funeral can add to the stress. Funeral costs in Australia can range from around $4,000 for a basic cremation to $15,000 or more for a more elaborate burial service. These expenses can include funeral director fees, transportation, the coffin, death certificates, permits, burial or cremation, a cemetery plot, and other costs like a celebrant or clergy, flowers, newspaper notices, and the wake.

Fortunately, there are several options available to help you manage and pay for funeral expenses. From setting up a dedicated savings account to exploring pre-paid funeral plans, funeral bonds, and funeral insurance, this article will guide you through the various strategies to ensure your funeral is covered without putting undue financial strain on your family.

Key Takeaways

• Funeral costs in Australia can range from $4,000 for a basic cremation to $15,000 or more for an elaborate burial service.
• Saving in a dedicated account is a straightforward way to pay for a funeral, allowing you to cover costs at today's prices.
• Pre-paid funeral plans and funeral bonds allow you to pay for your funeral in advance, protecting against future price increases.
• Funeral insurance provides a lump sum payment to your family to cover funeral expenses, but premiums can increase over time.
• Superannuation and government bereavement payments may also be able to help cover funeral costs.

Funerals can be a significant financial expense, with costs ranging from $4,000 for a basic cremation to around $15,000 for a more elaborate burial. Understanding the typical funeral expenses is crucial in planning and budgeting for this important event.

What Funerals Cost

The cost of a funeral can vary greatly depending on the type of service you choose. A traditional funeral with a burial typically costs more than a direct cremation. Additionally, the location, the funeral home you select, and the specific services and products you require can all impact the total cost.

Typical Funeral Expenses

A typical funeral will include a range of expenses, such as funeral director fees, transportation, the coffin or urn, death certificates, permits, the burial or cremation, the cemetery plot, and additional costs for a celebrant or clergy, flowers, newspaper notices, and the wake or reception.

Other factors that can influence the overall funeral cost include whether you opt for a green funeral, a memorial service, or a direct cremation. It's important to research the various options and their associated costs to make an informed decision that aligns with your budget and preferences.

The simplest way to pay for a funeral is to save up for it. You can set up a dedicated savings account separate from your everyday bank account specifically for funeral expenses. This ensures you have the money for your funeral set aside when the time comes.

Setting Up a Dedicated Savings Account

Whether it's a term deposit or a regular savings account, having a dedicated savings account for your funeral costs is a wise choice. This way, the funds are separate from your everyday finances and can grow over time through regular payments and interest earned.

Deciding on Contribution Amounts

When setting up your funeral savings, consider making regular payments through a direct debit from your main bank account. This ensures consistent contributions over time to reach your funeral savings goal. The amount you contribute each month or year will depend on your financial situation and the estimated cost of the funeral you envision.

Telling Family About Funeral Savings

It's important to tell your family and beneficiaries about the dedicated savings account you've set up for your funeral expenses. This ensures they are aware of the money for your funeral and can access it when needed to cover the costs.

If you're looking to alleviate the financial burden on your loved ones, a prepaid funeral plan might be the ideal solution. With a prepaid funeral plan, you can arrange and pay for your funeral in advance through your local funeral director. This approach ensures that the cost of the funeral is calculated at today's prices, protecting you from potential cost increases over time.

Paying for Funeral at Today's Prices

One of the primary benefits of a prepaid funeral is the ability to lock in the cost of the funeral at today's prices. This means you can avoid the risk of rising expenses in the future. You have the flexibility to pay the full amount upfront or make regular payments over time, making it a more manageable financial commitment compared to taking out a loan with potentially high interest rates.

Funeral Fund Rules by State

The regulations surrounding funeral funds vary between Australian states and territories. It’s essential to research the specific consumer protections in your state to ensure your prepaid funeral plan is secure and your money is safeguarded. The National Funeral Directors Association (NFDA) can be a valuable resource for understanding these regulations and ensuring you choose a reputable funeral director. With many funeral services available, it's crucial to select one that adheres to the legal requirements and provides peace of mind.

When it comes to paying for a funeral, there are several financing options to consider. One popular choice is a funeral bond. A funeral bond is a special financial product that helps you save for your funeral over time. By making regular payments, your money is invested and grows in value, with the funds only accessible for your eventual funeral expenses.

Funeral Bonds

With a funeral bond, you can pay for your funeral in advance at today's prices, protecting your loved ones from the future rise in funeral costs. The money deposited into the bond can only be used for your funeral and cannot be withdrawn earlier, ensuring the funds are there when needed.

Reading Product Disclosure Statements

Before investing in a funeral bond, it's important to carefully review the product disclosure statement (PDS). This document will outline the terms and conditions of the bond, including any fees, investment options, and restrictions on accessing the funds. Thoroughly understanding the costs associated with the bond will help you make an informed decision that aligns with your financial goals and funeral preferences.

Funeral insurance, also called a funeral plan or funeral cover, involves making regular ongoing payments called 'premiums' that usually increase over time. In return, your family will receive a set amount of money to cover the cost of your funeral when you pass away.

Funeral Insurance Pros and Cons

The main benefit of funeral insurance is that it can provide your loved ones with financial assistance to pay for your funeral when the time comes. This can help to ease the financial burden and ensure your funeral is covered, even if you weren't able to save up the full amount yourself.

However, one potential downside is that you may end up paying more in premiums over time than the actual amount paid out for your funeral. Additionally, there may be exclusions or limitations on what the insurance will cover, so it's important to carefully read the product disclosure statement to understand exactly what you're covered for.

Affordability of Premiums Over Time

Another important consideration with funeral insurance is the affordability of the ongoing premiums over time. While the initial premiums may be manageable, they often increase as you get older, which can make it challenging to continue to afford the coverage. It's important to factor in these potential premium increases when deciding if funeral insurance is the right option for you.

If you have superannuation (also known as super), your family may be able to use this to cover the costs of your funeral. However, accessing these funds can take time, so your family might need to pay upfront and claim it back once your will is finalised. In some cases, such as if you have a terminal illness, you may be able to get early access to super to cover funeral expenses.

Superannuation Benefits

Your superannuation can be a valuable resource to help your family cover the costs of your funeral. While it may take some time to access the funds, your loved ones can claim the money back once your estate is settled. This can ease the financial burden during a difficult time. It’s a good idea to check with your super fund and consider whether insurance as part of your superannuation may be available to assist with funeral costs.

Government Bereavement Payments

The government offers various forms of bereavement payments and assistance to help with funeral expenses. Services Australia and the Department of Veterans Affairs (DVA) may provide financial support if you or your partner were a veteran. Exploring all available government assistance options is important to ensure your family is supported during this time.

Applying for a Loan for Funeral Expenses

Another option to consider is applying for a loan to cover funeral expenses. While this can provide immediate funds, it’s crucial to shop around to find the best terms and interest rates to avoid high costs associated with lenders charging late fees or other penalties. A 24-month personal loan might be a suitable option, but you'll pay money on interest, so weigh your options carefully.

Savings and Financial Planning

Saving for a funeral in advance can also help alleviate financial stress. If you have savings to pay for the funeral, this can prevent the need for taking out a loan and spending money on interest. Moneysmart.gov.au offers resources and advice on how to save effectively for future expenses.

When it comes to managing the funeral costs, there are a variety of options to pay for the funeral. The most straightforward approach is to save up for the funeral in a dedicated savings account, allowing you to pay the costs at today's prices without the risk of losing money if you need to stop contributing.

Alternatively, you could consider pre-paid funeral plans or funeral bonds to plan ahead and protect your family from the financial burden. Additionally, exploring government assistance, superannuation benefits, and funeral insurance can also help save money on the overall funeral expenses.

Regardless of the approach you choose, the key is to plan ahead and make informed decisions to ensure your final wishes are carried out in a financially responsible manner. By taking the time to research and understand the various options to pay for a funeral, you can provide your loved ones with the support and resources they need during a difficult time.

How Driva Can Help You Finance Your Funeral Costs

Are you looking to finance your funeral costs? Driva can help by offering a funeral loan to cover the costs associated with a funeral, providing financial assistance for funeral expenses. If you find yourself in a situation where you can't afford to pay for your loved one's funeral, it's worth checking out Driva's personalised rates. With transparent and no hidden fees, Driva compares 30+ lenders to ensure you get the best rate possible. By taking out a funeral loan, you can help improve your credit score and set up a manageable payment plan with monthly payments. Whether you need to cover the cost of a funeral or are saving for a future funeral, Driva can assist you in securing the financial assistance you need.

What are some ways to pay for funeral costs?

Some ways to pay for funeral costs include using life insurance, savings, taking out a funeral loan, applying for funeral assistance, crowdfunding, or using a credit card.

What is a funeral loan?

A funeral loan is a personal loan specifically designed to cover the costs associated with a funeral, such as the cost of the casket, burial plot, funeral home services, and more.

Why consider taking out a funeral loan?

Taking out a funeral loan can help cover funeral expenses that may not be fully covered by savings, insurance, or other means, allowing you to give your loved one a dignified send-off.

How can life insurance help pay for a funeral?

Life insurance policies can provide a lump sum payment to cover funeral costs, helping to alleviate the financial burden on the family of the deceased.

What are some tips for managing funeral costs?

Some tips for managing funeral costs include comparing prices from different funeral homes, exploring prepaid funeral options, and considering ways to save or raise funds for the expenses.

Can you use crowdfunding to cover funeral costs?

Yes, crowdfunding platforms can be used to raise funds to cover funeral expenses, especially if the family is facing financial hardship.

How do funeral loans work?

Funeral loans work like personal loans, where you borrow a specific amount to cover the costs of the funeral and repay it over time with interest to the lender.