Funeral Insurance

Covering your family for important costs when you’re not around.

Last updated on April 20th, 2022 at 04:26 pm by Thomas Perrotta

Funeral Insurance

Funerals can be a significant expense to families who have just lost a loved one, costing a minimum of several thousand dollars all the way up to $15,000 depending on the nature of the ceremony. Providing your family with the cover it needs to pay for your funeral could be the best way for them and others to ensure your life is honoured in the most suitable way. Find out more about funeral insurance, how it works and the areas you should compare between policies in this comprehensive guide.

What is funeral insurance and how does it work?

Funeral insurance, or a funeral insurance plan, is a policy that you can buy which covers the cost of your funeral, instead of requiring your family to pay for the ceremony out of pocket. In this respect, it essentially operates in the same way as any other standard type of insurance policy: buyers pay premiums on a monthly or annual basis for a pre-determined amount of financial coverage in the event that they pass away, and their family will have to fund a funeral ceremony for them. This figure is paid directly to a beneficiary of the policy to avoid the hassle of obtaining it from their loved one’s finances. On the whole, funeral insurance appeals to seniors and pensioners, as they’re closer to the age where they need to start considering funeral expenses, but people of any age can take out a policy.

The monetary figure that you’re insured for is customisable for each policy holder, with most funeral insurance policies covering buyers for between $5,000 and $15,000 (the average cost of a funeral). Some insurers may agree to grant greater sums upon receiving a claim, but this situation is rare and generally considered to be unnecessary. Because of this, it’s encouraged that policy holders take an active role in determining the type and nature of their funeral. This can allow all parties to gain a greater understanding of the wishes of the policy holder and why the amount chosen has been set, as well as how it’ll be used.

There are two main ways that you can choose to pay your funeral insurance premiums: similarly to life insurance, these are stepped premiums and level premiums.

Stepped premiums are a system of premium payment whereby their cost gradually increases over time after starting at a low base. This means that they’re suitable for younger policy buyers who perhaps aren’t yet decided on whether funeral insurance is the right long-term option for them, as they don’t have to commit to exorbitant premium rates. The drawback to this, though, is that if you remain on a stepped-premium funeral insurance policy, the cost of covering yourself will rise quite significantly as you get older and may end up no longer being affordable for you.

Level premiums are the opposite of stepped premiums in that they maintain the same rate throughout your time holding a funeral insurance policy. This results in short-term pain with a higher initial rate for younger buyers than stepped premiums, but their consistency overtime ensures that they’ll end up saving you money by the time you get to your later years. It’s important to note, though, that your policy is likely to revert to a stepped premium setup eventually. This often occurs around retirement or pension age but can vary between insurers.

What does funeral insurance cover?

The nature of coverage can vary quite widely between insurance when it comes to the types of events that fall under a funeral insurance plan. You should be wary of the types of funeral cover provided and the conditions surrounding them. Here are some of the most common forms of cover that can vary between insurers:

Accidental death

If you die suddenly due to an accident, you’ll find that most insurers will cover the cost of your funeral. Some insurers may even increase the payout if your claim is made due to accidental death, although this doesn’t apply across the board. However, it’s important to be aware of your insurer’s policy on accidental death, as most insurers will use this as the only eligible event for a payout if you die within the first 12 months. This cover may not be automatically included in your policy, so you might have to pay more for it as an optional extra. Insurers are likely to have exclusions when it comes to accidental death, so ensure you review this before committing to a policy.

Terminal illness

Similarly, terminal illness cover is a common feature of funeral insurance policies but won’t appear everywhere. This can be a great help to you and your family in knowing that some of your financial future will be secured by a funeral insurance payout. Policy holders diagnosed with a terminal illness can take a more active approach to determining their overall coverage and how to utilise the funds. Be careful of how your insurer defines terminal illness, though, as this will vary. You’ll also have to factor in whether death due to terminal illness will be covered at all in the opening 12 months.

Accidental injury

You may find that you’re also covered for serious injuries under your funeral insurance. These are usually limited to life-changing injuries caused by accidents like paraplegia, quadriplegia and/or loss of limbs or vital senses. Once again, be mindful of different definitions when it comes to accidental injury, as well as other conditions surrounding this benefit like age limits.

In terms of the funeral itself, policies will cover you and your family for a wide range of costs associated with arranging a funeral. While these will differ between insurers, you’ll find that most of these will be covered across the board. Here are some of the funeral-related charges that are likely to be covered under your funeral insurance policy.

Funeral charge What it is How much it can cost
Funeral advertisement

Putting a death notice in the paper is often necessary to alert the wider community of someone’s death and upcoming funeral, but they can be incredibly expensive to place.

$200 to $300+

Funeral service fee

This is one of the most substantial fees you’re likely to encounter in the funeral process. Funeral directors handle most of the work in the lead up to the ceremony, such as submitting the required legal documentation such as cremation permits and death certificates and arranging flowers and cemetery space.

$2,000 to $3,000+

Burial and headstone

Finding the right plot to be laid to rest in can be challenging cost-wise, as the highest-quality areas can prove to be staggeringly expensive. This is also the case for headstones, with even the smallest and cheapest likely to set you back four figures.



Considered to be the most important and significant cost in the process, a casket is likely to take up the bulk of your overall outlay on your funeral. Unlike some other aspects, though, this isn’t an optional charge if you’re wanting insurance for burial.

$1,000 to $10,000


Cremation cover is generally cheaper than burial insurance when it comes to funerals, but they still carry substantial costs.



Although generally far less expensive than coffins, urns still aren’t an insignificant price to pay when you’re looking at higher-quality, top of the market options. There are many cheaper options if you’re operating on a tighter budget, however.

$50 to $500


This generally covers the cost of hearse hire, as well as any other transfer of the deceased to and from the funeral home.


Burial service

Larger-scale funeral services can include costs such as chapel fees, flowers and venue hire and catering costs for wakes. You’ll likely pay more for a graveside service than most other types of funeral.

$3,000 to $5,000+

Cremation service

These are often less expensive than your standard burial service. You’ll have to pay more if you have a chapel service alongside the cremation than you would at a crematorium.

$1,500 to $3,000+

What factors affect how much funeral insurance costs?

In terms of the cost of your funeral insurance premiums, there are a variety of factors that your insurer will take into account when assessing your policy application. Take a look at some of the areas that can influence the cost of your funeral insurance premiums.


It becomes gradually more expensive to be insured for funeral costs as you get older, given the increased likelihood of making a claim on your policy. Depending on the type of premium you choose to pay and the age you are when you first take out your policy, you could end up paying more for your funeral insurance than the next person.

Type of premium

As outlined previously, the type of premium you choose to pay will have a substantial impact on your overall insurance spend. For example, if you’re only wanting to take out short-term funeral insurance in your younger years, stepped premiums are more likely to be the best option for you, whereas long-term policy holders should look to level premiums to maintain consistency of payments and save money when you’re older.


Depending on where you are in Australia, funerals will vary in cost, which in turn impacts upon the cost of your premiums. New South Wales has the highest cost of living and is generally the most expensive when it comes to purchasing a cemetery plot than other states and territories, for instance.

Insured amount

As with other types of insurance, the cost of premiums correlates directly to the amount you’re looking to be insured for. $15,000 funeral cover will cost more than $5,000 funeral cover because your insurer is covering themselves for the amount they stand to lose when they pay for your expenses. If you’re looking to avoid more costly premiums, you could start by reassessing the sum you’re insured for and determine whether your family will require that amount for your funeral.

Optional extras

Optional extras can be a meaningful way of extending the reach of your policy’s coverage, but they’ll come at an extra cost. Accidental death or injury cover is one such example, which can usually be purchased as an optional extra on your policy if it isn’t already included.


Premiums for smokers are generally significantly greater than those for non-smokers due to the increased risk of illness and death. If you’re looking to take out a funeral insurance plan at a cheaper premium rate, one of the first things you should do is quit smoking. This can save you upwards of 50% on your premiums month to month.


The Australian economy ultimately plays a fairly significant role in determining the cost of insurance premiums. As inflation occurs over time, the cost of premiums will rise, even if they’re being paid on a level-premium basis.

Explained: the difference between funeral insurance and life insurance

The pros and cons of funeral insurance


Covers a necessary and expensive cost

Funerals are a necessary expense but honouring your loved one’s life in the right way can come at a high price; this insurance removes the financial burden

Easy to apply for

With few eligibility requirements on funeral insurance policies, you won’t be hindered by having to undergo medical history and current health checks as part of your application

More affordable than life insurance

Compared to other policies that intersect with it, funeral insurance’s premiums are relatively inexpensive if you’re in the right age bracket and a non-smoker

Peace of mind for your family

There isn’t only a financial burden associated with funerals, but also an emotional toll. A policy will ease some of the stress on your family in a difficult time


May not be worth it

Depending on how long you have it and your age profile, you could end up spending far more money on premiums than the cost of your funeral

Premiums may increase with age

If you choose a stepped premium funeral insurance plan, you’ll have to fight off rising costs as you get older

Establish a good credit score

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May not cover you under certain circumstances

If you die within the first 12 months of your policy being taken out, you’ll likely only be covered for accidental death

Top tips for ways to compare funeral insurance policies

Cost of premiums

An easy point of comparison to make, the cost of your funeral insurance premiums is important to keep at a manageable level. Even if you’re getting the best quality coverage, it counts for naught if you’re struggling to keep on top of your payments and end up spending more than the amount you’ll eventually be covered for.

Covered events

Not every insurer will list the same inclusions under their policies, so you should always analyse this closely when comparing different options. One of the factors that’s likely to come into play is how your insurance policy covers accidental death, namely whether it’s included in your policy or you’ll have to pay for it as an optional extra.

Maximum payout

Not all policies will have the same upper limits when it comes to the size of the benefit you’ll receive when your family makes a funeral insurance claim. For instance, if you’re looking at a relatively expensive, extravagant funeral service, it’s worth going for a policy that might be willing to pay you more.

Capped premiums

Some insurance policies will cap their premiums at a certain amount or stage of your life, meaning that you’re protected from paying beyond your insured amount. Not all insurers are guaranteed to do this, though, so be sure to look at this factor before committing to a policy that won’t protect you against exorbitant premium rate rises.

Financial hardship mechanisms

If you fall into a difficult spot financially, some insurers will have grace periods in place to help you if you become temporarily unable to make insurance payments. These prevent you from simply defaulting on your policy and losing all your coverage, but instead help you get your feet back on the ground. Your cover may be less than previously, though.

Frequently asked funeral insurance questions

Should I take out a life insurance policy instead of funeral insurance?

As outlined, these types of insurance serve different purposes. If you already have a life insurance policy, you may be able to incorporate funeral coverage into that rather than take out a separate funeral insurance policy. Many will prefer the ease of access to funeral insurance and the speed at which claims are paid out, however.

Is it worth getting funeral insurance?

If you find yourself the right deal and don’t end up paying more than the cost of your funeral, yes – there are other options open to those looking to provide financial coverage to their families for their funeral, such as a dedicated savings account, but funeral insurance can certainly provide peace of mind and immediate relief.

Are children covered under funeral insurance?

Sometimes – if your child passes away or suffers a serious or life-changing injury, there are some insurers who’ll be willing to cover the cost of their funeral or grant a benefit. This is typically only an optional extra, however.

Do I need funeral insurance if I’m a veteran?

Maybe not – depending on your circumstances, you may be covered for funeral expenses by the Department of Veterans’ Affairs. Otherwise, your state or territory government can handle this coverage, as can your trade union in some cases.

What is funeral insurance for Australian seniors?

As perhaps the most relevant party to be taking out funeral insurance, it comes as no surprise that funeral insurance is available to Australian seniors. This essentially functions in the same way as funeral insurance policies for anyone else, with eligible applicants up the age of 80 can take out a funeral insurance policy with no hassle. For those taking out funeral insurance as pensioners for the first time, levelled premiums are often the wisest choice to prevent increasingly steep premiums as you get older.

What’s the best way to get a funeral insurance quote online?

Before going directly to your insurer, it’s crucial to always compare the best options on the market. That’s where Savvy comes in, as our comprehensive comparison services will ensure you’ll be able to compare insurance policies in all the most important areas.