Funeral a high price to pay for death

THE average funeral costs about $7000, yet research by comparison site Finder shows 60% of Australians either haven’t thought about their funeral costs or are expecting relatives to foot the bill.

One in 10 have considered ways of dodging the expense altogether by donating their body to science or not having a funeral at all.

Decisions about funeral arrangements typically need to be made quickly.

Understandably, money watchdog ASIC found we usually settle for the first funeral product we find with little thought about value for money.

Websites such as Gathered Here (www. gatheredhere.com.au) offer online price comparisons of funeral costs. However, the big question can be how to pay for it all.

Using life insurance may be an option, though this assumes cover is in place – which may not be the case for many seniors.

An alternative is prepaid funerals available through

❝ As many as 80% of funeral policies sold are cancelled – often in the first year – largely due to the cost.

funeral directors. You choose the type of funeral you’d like and pay for it in advance or pay it off gradually, a bit like lay-by.

This locks in the cost at today’s prices but you may not get your money back if you change your mind.

Another option is funeral bonds. These are a tax-free investment that can be accessed only after your death. The sweetener for retirees is that money invested in funeral bonds (up to a set limit) is normally excluded from the age pension assets test.

A third possibility is funeral insurance.

You pay premiums and if you die the policy covers the cost of the funeral. The catch is the premiums can skyrocket as you get older.

Canstar found it can cost a 52-year-old $45 in monthly premiums to buy $10,000 worth of cover for funeral expenses. For a 72-year old, the monthly premiums rise to $72.

According to ASIC, as many as 80% of funeral policies sold are cancelled – often in the first year – largely due to the cost. But if you stop paying, you lose the cover.

If you’re really concerned about meeting funeral costs, a simple option is to open a dedicated savings account to save for the expense. Whatever the case, be sure to let loved ones know about financial products you have in place to pay for your funeral. It’s a final legacy that could be appreciated by family members.