Seniors’ funeral insurance

Ensuring your family is covered for expensive costs in the future.

Seniors’ funeral insurance

If you’re getting older, it might be time to start considering whether to take out an insurance policy to cover the cost of your funeral. These services usually cost a pretty penny, so giving your family a helping hand can make a big difference to their finances after you’re gone. Choosing the right senior’s funeral insurance policy to suit your needs can seem like a challenging prospect, but it’s not nearly as complicated as you might think if you’re across the important ins and outs. Find out more about it, how it works and how you should be comparing the best funeral insurance for seniors in this comprehensive guide.

What is seniors’ funeral insurance and how does it work?

Seniors’ funeral insurance functions in essentially the same way as any other funeral insurance policy; taking out cover in this area will provide your family with a pre-determined compensatory figure to reimburse them for the cost of your funeral. In doing so, you’ll have to pay premiums to maintain your coverage, which can typically be done weekly, fortnightly, monthly or annually (most commonly one of the latter two).

Part of the funeral insurance process is determining the amount you wish to be covered for. Although some insurers may go above or below, the general coverage amount for funeral insurance is between $5,000 and $15,000, in line with typical funeral costs in Australia. This price range covers various types of funeral services, including simple cremations, cremation services, burial services and more elaborate chapel services. In this way, it’s incredibly versatile and can be tailored to your funeral needs, big or small.

In terms of its coverage, Australian seniors’ funeral insurance is quite far-reaching. Any funeral costs that you may have to pay will be covered by your policy, provided you’re insured for an adequate amount. Some of these may include:

  • Funeral director’s service fee
  • Burial/cremation service insurance for seniors
  • Coffin/urn
  • Transportation of the deceased
  • Keeping the deceased at funeral home
  • Flowers
  • Wake costs (venue hire, food and drinks)
  • Newspaper advertisement
  • Headstone/plaque

Which insured events does seniors’ funeral insurance cover?

There are several different insured events that can prompt a funeral insurance claim. This aspect of your policy is one of the most important to consider, as you should know exactly what you are and aren’t covered for when you sign up to prevent any unwelcome surprises. Here’s what you’re likely to be covered for under your funeral insurance policy:

Natural causes or related illness/condition

Old age and illnesses stemming from it are amongst the most common causes of death in Australia, so these are obviously covered by your funeral insurance policy. An important thing to note is that despite this, most funeral insurance policies won’t cover you for any age-related death in the first 12 months of your policy, meaning that your family could be left in the lurch if you pass away soon after taking it out. One way to try to mitigate this risk is to buy your policy at an earlier age, such as purchasing at 65 instead of 75.

Terminal illness

Death caused by terminal illness is slightly more complicated when it comes to seniors’ funeral insurance. Insurers may have differing definitions on what constitutes a terminal illness, often defining it as being given 12 months or less to live. If you’re diagnosed with a terminal illness within the first 12 months of buying your policy, you won’t be covered for your insured sum. Rather, your insurer may offer you a refund on the premiums paid up to that point. Otherwise, passing away due to terminal illness is covered by your Australian seniors’ funeral insurance policy.

Accidental death

Unlike the previous two, accidental death coverage isn’t automatically included in every funeral insurance policy. Rather, it may appear as an optional extra with some providers, meaning you’ll have to pay more for your premiums to ensure that you’re covered for it. Accidental death is typically the only insured event that you’ll be covered for inside the first 12 months of buying your seniors’ funeral insurance policy, however. In some cases, this payout will be increased by up to two or three times depending on your insurer. Be careful also about the exclusions your insurer places on accidental death cover, as they may not pay out your sum if accidental death is caused by self-harm, for example.

Accidental life-changing injury

You may not think this would be covered by funeral plans for pensioners, but serious and life-changing injury can fall under your policy. Different injuries will receive different payouts, with loss of vital senses or limbs and significant head trauma amongst the higher end for compensation. Once again, it’s crucial to be aware of the inclusions and exclusions surrounding this feature before signing up for your policy.

How do I compare seniors’ funeral insurance?

Comparison points between seniors’ funeral insurance policies aren’t hard to come by. There are a number of key areas that should be closely analysed when choosing between the best insurance providers on the market. Savvy is a great place to start when comparing insurers, as our thorough comparison tools contrast the most important factors to you. These are some of the major areas you should consider when comparing seniors’ funeral insurance:

Comparison point Why you should compare them
Premium structure

You can choose between two different types of premium for seniors’ funeral insurance: stepped premiums, which increase in price with age, and level premiums, which remain the same throughout your policy. These will largely dictate the amount you’ll have to pay for your funeral insurance, so it’s an important decision. For seniors, level premiums are generally advised, as they avoid the requirement to pay more for your insurance as you get older at the expense of a slightly higher initial outlay.

Cost of premiums

Fortunately, it’s not a complicated aspect of a policy to compare, as it’s a simple black-and-white as to which is cheaper. It’s important to remember that even if you’re living on the pension, price shouldn’t be the sole factor that dictates your decision.

Policy coverage

This is the big one that should garner the most attention. Before you think about how much you can receive, you first must know that you’ll be able to receive it. As mentioned earlier, insurers will have clearly defined inclusions and exclusions when it comes to the causes of death that are covered for their policies, so you should be thoroughly across these when comparing your options. Be sure to read over your insurer’s Product Disclosure Statement (PDS) before committing to a policy.

Minimum and maximum payout

There will always be a minimum and maximum amount that can be insured for under a senior funeral plan. If you’re looking for coverage on the higher end, or indeed a small amount of coverage, you should survey the market to find the policy that suits your financial needs.

Optional extras

There are several optional extras that may not be included in your seniors’ funeral insurance policy which you might want to expand the scope of your coverage. Extras relating to accidental death and injury are the most likely candidates to be sought out in this space, but you may find others that suit your needs.

The pros and cons of seniors’ funeral insurance

Consider some of the pros and cons if you’re still undecided about funeral plans for pensioners

PROS

Provides peace of mind

Seniors’ funeral insurance takes away some of the hassle and worry that you and your family may be feeling about funding your funeral

No need to disclose health information

Unlike other types of insurance like life insurance, seniors’ funeral insurance isn’t subject to health checks

Higher age limits        

Although not as extensive in its coverage, funeral insurance can provide a level of financial relief for seniors when life insurance is no longer a viable option due to age or cost

CONS

Rising premiums

You could be paying more for seniors’ funeral insurance year on year and if your premiums aren’t capped, you may pay more than your insured sum

Lack of first-year protection        

Because accidental death is the only event likely to be covered under your policy, other causes will rule you ineligible to receive a payout

Top tips for features to look for on your seniors’ funeral insurance policy

Take a look at some of the must-haves for seniors’ funeral insurance policies

Premium capping

Premium caps can come in the form of both sum insured and premium age caps. The former will remove the requirement for you to pay premiums when the total premium spend is equal to the amount you’re insured for, while the latter will do the same when you reach a certain age. Premiums with age caps tend to be higher than sum insured premium caps.

Cooling off periods

Most insurers will allow you a 30-day cooling off period, during which time you can cancel your coverage at no cost if you’re not wholly satisfied with it. This is useful for those who are looking to trial a policy before they commit to it long-term or simply aren’t yet decided on whether a certain insurer is right for them.

Grace periods

Similarly, most insurers will have systems in place to prevent you from being completely overwhelmed by insurance payments. Grace periods are in place to alleviate some of your financial stress by freezing premium payments for up to three months depending on your insurer.

Accidental injury coverage

As mentioned previously, not all insurers will cover you for accidental serious injury, but some do. If you don’t already have coverage in this area, it might be worth seeking out a senior funeral plan with accidental injury cover. As you get older, the likelihood of accidental injury increases, so it might be worth your while to invest in this area.

Common seniors’ funeral insurance queries

Here are some of the most frequently asked questions about seniors’ funeral insurance

How much does seniors’ funeral insurance cost?

There’s no one set amount for how much you’ll pay for your seniors’ funeral insurance, but if you have sum insured capped premiums, you’ll only pay between $5,000 and $15,000 total. Some of the factors that can influence the cost of premiums include:

  • Your age
  • Where you live
  • How much you’re insuring your funeral expenses for
  • Whether you smoke
  • Type of premium you choose
Do I have to complete any medical testing to qualify for seniors’ funeral insurance?

No – seniors’ funeral insurance isn’t based around previous or current health. However, some insurers will require applicants above a certain age (usually 80-90 years old) to undergo testing as part of the process.

What is the best funeral insurance for seniors?

Everyone’s preferences are different, but it’s usually a smart move to choose level premiums in terms of payment. If you’re on more of a budget, you may wish to supply enough funds for a simple cremation and benefit in the short-term from reduced premiums, while those looking for a higher-cost funeral service may wish to invest more in their premiums. Generally, it’s always best for seniors to take out a funeral insurance policy with as much coverage as possible to maximise their chances of eligibility upon a claim.

How can I pay for a funeral with no money?

This is known as a pauper’s funeral, which takes place when you or your family are unable to supply the funds required for a funeral. In essence, these funerals are usually held at a crematorium, although some may be burials, where the deceased’s remains will be left unmarked. Alternatively, most states and territories has established initiatives to help low income-earning families when it comes to funding a funeral for their loved one, while the Department of Veterans’ Affairs can take on the financial responsibility of a veteran’s funeral.

When will my family receive the payout from my seniors’ funeral insurance policy?

These are generally fast turnaround times for funeral insurance and can occur as soon as one business day of submitting your claim. Other policies like life insurance will generally have a much longer delay between a claim being made and funds being released.

Can I increase my current seniors’ health insurance policy?

Probably not – to increase your covered amount, you’ll likely have to cancel your existing policy and apply for a new one. However, you’ll probably be able to apply to reduce your sum insured on your existing policy.