The pros and cons of having funeral insurance

Last updated on June 2nd, 2023
  Written by 
Bill Tsouvalas
Bill Tsouvalas is the managing director and a key company spokesperson at Savvy. As a personal finance expert, he often shares his insights on a range of topics, being featured on leading news outlets including News Corp publications such as the Daily Telegraph and Herald Sun, Fairfax Media publications such as the Australian Financial Review, the Seven Network and more. Bill has over 15 years of experience working in the finance industry and founded Savvy in 2010 with a vision to provide affordable and accessible finance options to all Australians. He has built Savvy from a small asset finance brokerage into a financial comparison website which now attracts close to 2 million Aussies per year and was included in the BRW’s Fast 100 in 2015 as one of the fastest-growing companies in the country. He’s passionate about helping Australians make financially savvy decisions and reviews content across the brand to ensure its accuracy. You can follow Bill on LinkedIn.
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Pros and cons of funeral insurance

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Burying your loved one with dignity is something that anyone would love to do. Without preparing for the costs of funeral things can get expensive. Having funeral insurance can help you take care of such expenses immediately without the stress. Here is how you can compare the pros and cons of a funeral insurance policy to get the most out of it.

What it means to have funeral insurance

Funeral insurance is a policy that can help you and your loved ones prepare for funeral expenses. A lump sum will be paid out to the beneficiaries to help them take care of funeral expenses that may arise. The benefit of having such a policy is that it is paid out immediately once you have notified the insurer. You get to choose how you would like to pay your premiums and the amount in which you wish to be covered for either fortnightly or monthly.

The Pros

Comparing your options is always a good way to see if the policy will be suitable for you. It can also let you see if you will be able to afford the premiums over the life of the policy. Some of the benefits that come with having funeral insurance are:

  • You can get covered immediately and select beneficiaries who will receive the pay-out. Remember to check if you meet the requirements.
  • The beneficiaries can use the lump sum to take care of a wide range of immediate expenses.
  • It is paid out immediately, within 3 to 7 days when you place your claim. This means that you don’t have to stress about how you will pay for expenses. You will need to provide proof in the form of a certified death certificate to an insurer.
  • You can receive a minimum of $5,000 and a maximum of $15,000 depending on your insurer.
  • Premiums are based on your circumstances to ensure that you are adequately covered.
  • Your premiums can be capped depending on the insurer.

The cons

Not all funeral insurance policies are created the same. Therefore, it is vital to compare your options to find one that is suitable for your circumstances. Some of the pitfalls that come with having such a policy are:

  • Some policies will not cover you for accidental death that occurs after the first 12 months of taking out a policy or for death that has resulted from suicide.
  • Depending on your insurer you may not be eligible for cover if your death happened while travelling outside of Australia or to a country that has been declared a no-go area.
  • Your premiums can become expensive which is why it is vital to compare policies.
  • The maximum amount in which you are covered for can be limiting depending on the funeral expenses.
  • You will not be covered if the policy holder’s death is self-inflicted or due to suicide within the first 12 months of taking out the policy.

The take home is to compare your various policies by reading the product disclosure statement to see if it will be suitable for your circumstances. This will also show you what is included and excluded within the policy so that there are no surprises when it is time to place a claim.

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This guide provides general information and does not consider your individual needs, finances or objectives. We do not make any recommendation or suggestion about which product is best for you based on your specific situation and we do not compare all companies in the market, or all products offered by all companies. It’s always important to consider whether professional financial, legal or taxation advice is appropriate for you before choosing or purchasing a financial product.

The content on our website is produced by experts in the field of finance and reviewed as part of our editorial guidelines. We endeavour to keep all information across our site updated with accurate information.

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