Money

Meeting those final bills

Paul Clitheroe.
Paul Clitheroe.

LIKE many western nations, Australia has an ageing population. This has fuelled the growth of products and services pitched at senior Australians - like funeral plans and funeral insurance, which are openly marketed these days, something that was unthinkable not all that long ago. 

No one likes to think or talk about their own death but, if you feel inclined to do so, it can make sense to discuss your final wishes with family members. Letting them know the type of funeral you'd like or your preference for burial versus cremation for instance, means your family don't have to make more difficult decisions at a time of extreme grief.

It is also important to think about how these final bills will be met because funerals don't come cheap.

On average, a funeral costs somewhere between $4,000 and $7,000, and footing the bill can be a challenge. Life insurance payouts may take a few weeks to be finalised, and probate (when the court validates a person's will) can take even longer. It means your family could be left funding the expense and the reality is that for many people this can be very challenging.

In some circumstances, family members may be eligible for a financial helping hand from government organisations like Centrelink and the Department of Veterans Affairs (DVA). However this assistance is generally only available if the deceased was a recipient of Centrelink or DVA support payments.

This being the case it's not surprising that a range of different funding options are being marketed to cover funeral expenses. It may seem a morbid topic but as with any financial product, it pays to be aware of the upsides as well as the pitfalls before committing your cash.

One option is prepaid funerals. These let you choose the type of funeral you would like, and either pay for it in full in advance, or pay it off over a period of time. Some states require prepaid funerals to be registered with the department of consumer affairs or fair trading. So check with the relevant department in your state or territory to ensure you're dealing with a legitimate organisation.

An alternative is funeral bonds. These offer a tax free investment that can only be accessed after your death. It can be an appealing option for retirees as money invested in prepaid funeral plans or funeral bonds is usually excluded from the age pension assets test.

Another option is funeral insurance. The idea is that you sign up to a policy, making monthly payments to cover funeral costs up to an agreed value. The younger you are, the lower the premiums, however it is important to check that after years of paying premiums you don't end up paying more than a funeral could cost.

With some insurers, a male aged 46 can expect to pay premiums of $11 each month to purchase funeral cover worth $5,000. For a 66-year old man, the premiums can be around $40 per month.

No matter what sort of financial product you use, be sure to tell someone you trust, such as your executor, that you have made plans. There's not much point in paying for funeral insurance if no one knows you have a policy in place.

For more information on meeting the costs of a funeral, check out the government's Money Smart website (www.moneysmart.gov.au).

Paul Clitheroe is a founding director of financial planning firm ipac, chairman of the Australian Government Financial Literacy Board and chief commentator for Money magazine. For more information, visit www.paulsmoney.com.au
 

Topics:  bills, death, funerals, opinion, paul clitheroe


Stay Connected

Update your news preferences and get the latest news delivered to your inbox.

'Aggressive' great white shark knocks man off board

A 2.28m Great White is tagged by the Department of Primary Industries at Coffs Harbour on Tuesday.

"It went under his SUP towards our son, then circled around."

Police: Have you seen Jak?

Have you seen Jak McLean?

Police are seeking assistance from the public to locate Jak McLean

Why the shark barrier at Lighthouse Beach has stalled

Lighthouse Beach at Ballina closed after a shark attack.
Photo Cathy Adams / The Northern Star

Work on the controversial shark barrier has halted - here's why

Latest deals and offers

Shark barrier construction begins on North Coast beach

A HELICOPTER is hovering over a North Coast beach dropping concrete blocks and steel anchors into the surf as part of the construction of the new shark barrier.

'Aggressive' great white shark knocks man off board

A 2.28m Great White is tagged by the Department of Primary Industries at Coffs Harbour on Tuesday.

"It went under his SUP towards our son, then circled around."

Police: Have you seen Jak?

Have you seen Jak McLean?

Police are seeking assistance from the public to locate Jak McLean

Why the shark barrier at Lighthouse Beach has stalled

Lighthouse Beach at Ballina closed after a shark attack.
Photo Cathy Adams / The Northern Star

Work on the controversial shark barrier has halted - here's why

CCTV footage leads to arrest of woman for theft, drugs

Quick action by retail staff lead to a woman being arrested

Village masterplan push: Newrybar’s future up for discussion

COMMUNITY MASTERPLAN: Newrybar resident and business owner Paul Moses is chairman of the Newrybar Association which is trying to establish a masterplan for the historic village to put to Ballina Shire Council.

Community group wants to prepare masterplan for village

Pokémon Go makes Ingress into Clarence Valley

Pokemon Go player Dan Optland is pictured in the game w ith a "Pidgey" Pokemon he lured to a Pokestop at the Clarence Valley Conservatorium.

Pokemon Go Pokestops evolved from hard work of unsuspecting friends.

Thy Art Is Murder are killing it

See Thy Art is Murder on their killer tour happening right now. Photo Contributed

We talk with Thy Art is Murder about touring, babies, and new music

Date announced for Prince tribute concert

A Prince tribute concert will take place later this year

Matt Damon is taking a break from acting

Matt Damon is taking a break to spend time with his family

Police foiled terrifying 1m plot to kidnap Katie Price

Police foiled a £1 million plot to kidnap Katie Price and her family

Kristen Bell's baby confession

Kristen Bell once pretended to be asleep when her baby woke up early

Babylon 5's Jerry Doyle has died

Jerry Doyle has died from unknown causes at the age of 60

You can own this Queensland town for just $1

Yelarbon

Unprecedented auction of town's business centre with no reserve

Work starts on $15M Caloundra apartment building

Turning the first sod at the Aqua View Apartments site in Kings Beach are (from left) husband-and-wife developers Alex Yuan and Stella Sun with construction company Tomkins director Mike Tomkins and Councillor Tim Dwyer.

Developers excited about addition to Kings Beach skyline

Plans revealed for 1500-lot 'master-planned community'

Precinct will be bounded by Boundary St and Shoesmith Rd

Ecco Ripley sales run sparks prime release

MOVING IN: Sekisui House has announced the release of more residential blocks at Ecco Ripley.

Sekisui House is preparing to unveil more land at Ecco Ripley

Massive residential 9-storey high-rise hit by delays

An artist’s impression of the eight-storey-high apartment complex that Bernoth Holdings wants to build in South Toowoomba, next to the City Golf Club.

Developer struggles to get approved high-rise development started