Funeral Insurance

Compare funeral cover options as part of your life insurance planning to make sure you care for your loved ones in case the unexpected happens. 

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, updated on August 25th, 2023       

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A funeral can be a significant expense to any family that has just lost a loved one, costing a minimum of several thousand dollars all the way up to $15,000 or more, depending on the type of funeral you choose. Having life insurance that includes cover for the cost of a funeral means you'll have one less thing to worry about at a highly stressful time in your family's life. 

Here at Savvy, we don't compare stand-alone funeral insurance policies. However, we do compare life insurance policies which include cover for the cost of a funeral. Find out all about life insurance which includes funeral cover, and then learn how it can potentially bring you peace of mind in case the unexpected does happen. 

What is funeral insurance, and how does it work?

Funeral insurance, sometimes called a funeral insurance plan, is a policy that covers the cost of a funeral when an insured person dies. It works the same way as any other type of insurance policy: the policyholder pays a premium on a regular or annual basis for a pre-determined level of financial cover if they pass away. The funeral benefit amount is paid to a named beneficiary of the policy, usually a spouse, partner or close relative.

Generally, funeral insurance is most popular amongst seniors and pensioners, as they’re the ones closer to an age where they are thinking about the need for funeral cover. However, people of any age can take out a life insurance policy that includes funeral cover. The amount that you can be covered for varies, with most insurers offering coverage of between $5,000 and $15,000 to cover the cost of a funeral. Family funeral insurance policies are also available, offering cover to related family members.

There are two main ways that you can choose to pay your funeral insurance premiums:

Stepped premiums

Stepped premiums are a system of premium payment where the cost gradually increases over time, after starting at a low base. They’re very suitable for younger policyholders who may not be able to afford high premiums. The drawback to this system, though, is that if you remain on a stepped premium life insurance policy for a long time, the cost of your premiums will rise quite significantly as you get older. 

Level premiums

These are the opposite of stepped premiums. They remain the same throughout your insured period. This results in a higher initial cost for younger buyers than stepped premiums. However, over time they’ll end up saving you money in your later years. Premiums for funeral insurance will increase over time to take inflation into account, but the increases should only be in line with the current inflation rate. 

What does funeral insurance cover?

The nature of coverage varies widely between different insurance companies when it comes to the types of events that fall under a funeral insurance plan. Here are some of the most common forms of cover that can be offered:

Accidental injury

Accidental injury

You may find that you’re covered for serious injuries under your funeral insurance policy. The cover is usually limited to life-changing injuries such as paraplegia, quadriplegia and/or loss of limbs or vital senses. Compare the different definitions of injuries in similar life insurance policies, as no two policies are identical. There may be other conditions attached to injury clauses too, such as age limits.

Terminal illness

Terminal illness

Similarly, terminal illness cover is a common feature of funeral insurance policies. However, it is not included in all policies. This type of cover can be a great help to you and your family if you do receive a less-than-positive diagnosis. Be aware that the definition of terminal illness also varies between insurers, and there may be a waiting period after you take out the initial insurance during which you are not permitted to make a claim. 

Accidental death

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 due to accidental death, although this doesn’t apply across the board. However, it’s important to be fully aware of your insurer’s rules about accidental death. Many insurers will use this as the only eligible event that qualifies for a payout if you die within the first 12 months of taking out the policy.  Insurers sometimes have other exclusions when it comes to accidental death, so make sure you read the small print carefully before committing to a particular policy.

What are some of the costs involved in a funeral?

Expense item Item details Potential cost
Funeral notification

Placing a death notice in a local newspaper is often necessary to alert the wider community to someone’s death and upcoming funeral. 

$200 to $300+

Funeral service

This is the most substantial component of the funeral process. Funeral directors handle most of the legal work in the lead-up to the ceremony, for example handling the legal documentation necessary such as a burial or cremation permit and application for a death certificate. The funeral director also arranges transport to the service, 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 can still cost a considerable amount if you’re looking at higher-quality, top-of-the-market options. There are many cheaper options if you have 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.

$500 - $1,500

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 life 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 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 a younger person.

Type of premium

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 life insurance in your younger years, then stepped premiums are more likely to be the cheaper option for you, whereas long-term policyholders may find level premiums more attractive to save money in later years.


Funerals will vary in cost depending on where you live in Australia. This in turn impacts the cost of your premiums. For example, New South Wales has the highest cost of living, and is generally the most expensive state when it comes to purchasing a cemetery plot. 

Insured amount

As with other types of insurance, the cost of premiums correlates directly to the amount you’re looking to be insured for. For example, $15,000 cover will attract higher premiums than cover for $5,000. If you’re looking to avoid higher premiums, start by reassessing the sum that you’re insured for, and decide whether your family will really require a substantial amount for a funeral you'd be content with. 

Optional extras

Optional extras can be a meaningful way of extending 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 a standard inclusion. 


Premiums for smokers are generally significantly higher 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 life insurance premiums. 


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

Why compare life insurance through Savvy?

Pros and cons of including funeral insurance with your life insurance policy


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

Funeral insurance which is included as part of your life insurance package wont require any additional information to be supplied

Peace of mind for your family

There isn’t just a financial burden associated with a funeral, but also an emotional toll too. Funeral cover will ease some of the stress on your family in a difficult time of your life


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 face rising premiums as you get older

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

It is important to keep the cost of life or funeral insurance at a manageable level. Even if you’re getting the best quality coverage, it counts for naught if you struggle to keep on top of your premium payments. 

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 to examine is how your insurance policy covers accidental death, namely whether it’s included in your policy or whether 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 funeral service, it’s worth going for a policy that has a higher benefit limit. 

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 doesn't protect you against sharp premium rate rises.

Financial hardship mechanisms

If you fall into a difficult financial situation, some insurers 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 back on your feet. 

Frequently asked funeral insurance questions

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 available, such as a dedicated funeral savings account, or funeral bonds, but funeral insurance can certainly provide peace of mind and immediate financial assistance in the event of a sudden unexpected death. Find out more about calculating the cost of a funeral before deciding which type of insurance may be the best option for you and your family.

Can children be covered under funeral insurance?

Yes, 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. However, this may be offered as an optional extra on some life insurance policies. 

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

You may not, depending on your circumstances. It's possible you may be covered for funeral expenses by the Department of Veterans’ Affairs. Otherwise, your state or territory government may also have a provision to handle the cost of a veteran's funeral. 

What is funeral insurance for Australian seniors?

Funeral insurance is usually available to all Australian seniors who take out a life insurance policy. Eligible applicants up to the age of 80 can usually take out additional funeral insurance 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.

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Savvy does not compare all life insurance policies or providers currently operating in the market. Any advice presented above or on other pages is general in nature and doesn’t consider your personal or business objectives, needs or finances. It’s always important to consider whether advice is suitable for you before purchasing an insurance policy.

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