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.
