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.

6,603 lightning strikes hit the Northern Rivers overnight

Lightning map from the Lightning Maps website showing the number of strikes over the last 24 hours.

Lightning map shows strikes across the region overnight

Coffs touted as medical marijuana trials begin in NSW

The Federal Government has moved to legalise medical marijuana, with the onus now on the state governments to follow suit.

NSW cancer patients can now apply for medical marijuana trial

Is this child sex offender too old for jail?

Former St Johns College Woodlawn teacher James Doran has been found guilty of committing a series of sex crimes against students.

Guilty of dozens of sex crimes, James Doran may never see prison

Local Partners

School's out as 50,000 NSW teachers stop work

PARENTS are being encouraged to find alternative care for students as about 50,000 New South Wales public school teachers stop work on Thursday morning.

Five things to do in Ballina this week

ICON: Renee Geyer is coming to Ballina.

Music, theatre, culture and more

Elvis is about to leave the building for good

FOR THE LAST TIME: Elvis impersonator, Craig Teys, will perform for the last time at the Slipway Hotel on December 3.

"I wouldn't change it for anything. But it is time to finish.”

WATCH: Local artists featured on ABC's iView

DOCUMENTARY: Behind the scenes of Createability short film Corey the Warrier are Yuin/Bundjalung man and painter Corey Stewart and filmmaker Isabel Darling.

Short films feature local artists living with disabilities

David Beckham's tattoos come to life for UNICEF campaign

David Beckham has called for an end to violence against children

Pop star Liam Payne's Facebook hacked with porn

"Things that can happen to you when you don't have sex."

Tim Roth was abused by his grandfather

Tim Roth was abused by his grandfather during his childhood.

Leo designs shocker tattoo for Tom Hardy after lost bet

Leonardo DiCaprio has designed a new tattoo for Tom Hardy

Hollywood star at home on the Coffs Coast

FEELING LUCKY, SON?: Scott Eastwood visited the Coffs Coast

Guess which Hollywood star has been seen around the Coffs Coast?

Ricky Gervais: There's 'no point' marrying Jane Fallon

RICKY Gervais "doesn't see the point" in marrying Jane Fallon.

Developer's grand new multi-million dollar estate

NEW ESTATE: This is the only plan revealed by the property developer's new Billabongs Estate in Agnes Water.

DEVELOPER given the go ahead for a massive estate with 149 homes.

Banks reclaim Gladstone homes as job losses bite

LONG FALL: Property experts Heron Todd say, based on key market indicators, Gladstone is still travelling to the bottom of the market, with property prices set to get cheaper.

Property valuers say Gladstone housing market hasn't hit the bottom

The million dollar property to test Mackay's market

This Victoria St building will go to auction Tuesday and investors will be watching closely to see how much it sells for.

'High profile architect designed CBD asset' goes to auction

Chinese locked out of Australian property market

The rules are different if you're a foreigner

The buyer was from China - the trouble started right there

Morrison signs off on new affordable rental model

Australia's Treasurer Scott Morrison speaks during a press conference after a meeting of the Council of Federal Financial Relations at Parliament House in Canberra, Friday, Dec. 2, 2016.

Scott Morrison signed off on development of a new financing model

Ready to SELL your property?

Post Your Ad Here!