How Much Does Funeral Insurance Cost?

Are you thinking about funeral insurance and wondering how much does it cost? Find out here with Savvy.

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, updated on August 29th, 2023       

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Cost of funeral insurance

Are you thinking about funeral planning and wondering how much does funeral insurance cost? Planning for end-of-life expenses is a responsible step to take to ensure your loved ones aren't burdened with financial stress during a difficult time. Funeral insurance can provide peace of mind, but the cost can vary widely.  

Here at Savvy, we don't directly compare standalone funeral insurance policies. However, our free comparison service does include life insurance which can include funeral cover. In this guide, we'll explore the factors that influence funeral insurance premiums and provide insights into how much you can expect to pay for this type of coverage. 

How much does funeral insurance cost on average?

There is no set cost for funeral insurance because just like other forms of life insurance, the cost will depend on how much cover you require, and other variables which will affect your premiums.  

On average, the monthly premiums for funeral insurance range from approximately $50 up to $150, depending on various factors. Here is a breakdown of average monthly funeral insurance premiums for a non-smoker, based on the policyholder's age when taking out a policy, with $10,000 of cover: 

  • 50-54 years: $53
  • 55-59 years: $65
  • 60-64 years: $80
  • 65-69 years: $103
  • 70-74 years: $146

These figures represent average costs, and actual premiums may vary depending on the insurance company you choose and policy terms and conditions. 

What factors affect the cost of funeral insurance?

These are the main variables that an insurance company will look at when deciding on the premium to charge for funeral insurance: 

  • Age: Generally, the younger you are when you start a funeral insurance policy, the lower your premiums will be.
  • Coverage amount: The amount of coverage you select directly impacts the cost. Policies with a higher benefit amount will have higher premiums.
  • Smoking: If you're a smoker, you may face higher premiums compared to non-smokers.
  • Stepped or level premiums: Policies with stepped premiums start lower but increase with age, while level premiums remain constant.

To get an accurate cost estimate, it's best to request quotes from different insurance providers so you can compare funeral insurance quotes side-by-side. Savvy does not compare such policies as we believe there are more beneficial insurance products available.  

What’s the difference between stepped and level premiums for funeral insurance?

These are the main differences between stepped and level premiums for funeral insurance.  

Stepped premiums: 

  • Stepped premiums are based on your age when you first take out the policy.
  • They start lower, but increase as you get older.
  • Premiums rise annually, typically on your policy anniversary.
  • Initially they are more affordable, but they can become expensive over time.
  • They offer cheaper funeral insurance for younger Aussies, but may not be as cost-effective in the long term.

Level premiums: 

  • Level premiums are calculated based on your age and smoking status at the outset.
  • They remain consistent throughout the life of the policy, apart from possible inflation adjustments.
  • They are initially more expensive than stepped premiums, but can be more cost-effective as you age.
  • They are ideal for those planning to keep their policy for a long time.
  • They provide financial predictability and stability over the years.

What are the benefits of funeral insurance?

The main benefits of funeral insurance are: 

  • Financial security: Funeral insurance provides a lump-sum payout to your named beneficiary to cover funeral expenses, ensuring your loved ones are not burdened with the cost of your funeral.
  • Choice of benefit level: You can choose the coverage amount that suits your needs, typically ranging from $3,000 to $15,000 or more.
  • Family policies: Some insurers offer family funeral insurance, covering multiple family members under one policy, providing added convenience.
  • Ease of application: Funeral insurance typically involves a straightforward application process with minimal paperwork.
  • No medical exams: Most policies offer immediate coverage without requiring a medical examination, making it accessible to individuals with health issues who may not qualify for life insurance.
  • Quick payouts: Beneficiaries may be able to receive the payout within 24 hours of making a claim, helping them to be able to arrange the funeral and manage immediate expenses.
  • Exempt from assets test: Prepaid funerals and funeral bonds are exempt from the aged pension assets test, allowing seniors to maintain their Centrelink aged pension benefits. 

Frequently asked questions about the cost of funeral insurance

What is the average cost of a funeral in Australia?

The average cost of a funeral in Australia can vary depending on factors like your location and personal preferences. On average, the cost of a burial service is just over $9,000, while cremations on average cost around $6,300. However, basic options can start from $3,000 for cremations and $6,000 for burials. 

Is the cost of funeral insurance tax deductable?

Funeral insurance premiums are generally not tax-deductible in Australia. These premiums are considered a personal expense and do not qualify for tax benefits. 

Is it possible to cash in a funeral insurance policy early?

Funeral insurance policies may offer an early cash-in option under specific circumstances, such as serious illness, or when you reach a certain age such as 80 or 85. However, the terms and conditions for early cash-in does vary between insurers, so it's essential to review your policy details. 

Is there a maximum age limit for paying funeral insurance premiums?

Yes, some funeral insurance policies allow you to stop paying premiums once you reach a certain age, often around 85. The policy remains in place, and your coverage continues without further premium payments. 

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Compare life insurance policies with Savvy

Although we don't compare specialised funeral insurance policies at Savvy, we can help you consider a range of life insurance options which includes funeral coverage. Get started with us today!

Disclaimer:

Savvy is partnered with Compare Club Australia Pty Ltd (AFS representative number 001279036) of Alternative Media Pty Ltd (AFS License number 486326) to provide readers with a variety of life insurance policies to compare. Savvy earns a commission from Compare Club each time a customer buys a life insurance policy via our website. We don’t arrange for products to be purchased from these brands directly, as all purchases are conducted via Compare Club.

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.

For any further information on the variety of insurers compared by Compare Club or how their business works, you can read their Financial Services Guide.