Due to the ever-increasing cost of funerals in Australia and its ageing population, funeral plans are becoming increasingly popular. Despite this, critics argue that they are unnecessary; if you have adequate life insurance, the payout your loved ones receive should more than cover the cost of a funeral.
With a funeral plan, financial aspects of your funeral are paid for in advance; when you die, the plan's administrator will pay the funeral director's fees directly. The funeral will then be carried out as you requested, as far as this is possible. Funeral plans have the advantage of enabling you to plan your funeral service, and indicate the way in which you would like to be commemorated after death.
Although a funeral plan is usually much cheaper than life insurance, you may find it less beneficial over time. If the average price of a funeral falls, or does not rise in line with inflation, you may actually end up paying more for your funeral by purchasing the plan in advance. Your life insurance payout is almost always much larger than your funeral costs, and so should be able to cover a standard funeral and provide for your loved ones. There are also common exclusions to funeral plans, such as the cost of buying a grave, which must be paid for by your family after your death. There is also a certain amount of risk that the choices you make in your plan now may not be available in the future.
However, funeral plans do offer you what life insurance does not: peace of mind that your funeral will be conducted according to your wishes. Life insurance and funeral plans are not substitutes for one another, and if you wish you can purchase both types of cover.
Generally there are no age limits applied to funeral plans, but some providers aim their plans at those over eighteen and under eighty-five years old.
