Funeral insurance
What is funeral insurance
If you pass away, funeral insurance cover could make a lump sum payment to assist your loved ones with funeral costs and other related expenses. Depending on the type of funeral, the potential out-of-pocket costs could be between $3,000 to $15,000, and this doesn’t include other final expenses like outstanding debts.1
However, funeral insurance isn’t the only way to get the peace of mind that your family could be financially supported during such a difficult time. Pre-paid funeral plans, funeral bonds and life insurance are alternative ways to potentially cover the cost of your funeral. Here’s how they work:
- Pre-paid funeral plan: You pay for your funeral in advance directly to the funeral director.
- Funeral bonds: An investment that builds value and is withdrawn after you pass away.
- Life insurance: Cover that could pay a large lump sum benefit if you pass away or are diagnosed with a terminal illness. Usually has more medical underwriting than funeral insurance but may have cheaper premiums as a result.
How does funeral insurance work?
To be covered by funeral insurance, you’re required to pay a regular premium (e.g. fortnightly, monthly or annually), the cost of which is influenced by your age, gender and level of cover (i.e. how much your beneficiaries receive in the event of your death). Typically, cover in Australia ranges from $5,000 to $15,000.2
Your eligibility for funeral insurance will vary between insurance providers, with the typical entry age for Australian residents ranging from 45 to 80. Again, depending on the insurer, you generally don’t need to undergo medical or blood tests to take out cover.
If a claim is made on your funeral insurance, the benefit amount will be paid to your nominated beneficiary (like your spouse or your child), which can assist with your funeral expenses.
Life insurance versus funeral insurance
What are the similarities and differences?
Both funeral insurance and life insurance are designed to pay out a lump sum of money to your chosen beneficiaries when you pass away.
However, unlike funeral insurance (which usually pays out a maximum of $15,000), life insurance may pay a significantly larger amount to your loved ones, depending on your cover amount. On top of this, life insurance policies can provide cover for a range of needs you generally won’t find in a funeral insurance policy.
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| Life insurance | |
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Life insurance for funeral costs and other expenses
As highlighted in our table above, some life insurers may offer an advanced payment to help with funeral expenses, which is also known as a funeral advancement benefit.
Furthermore, some policies may include benefits to help with financial planning costs and for other defined events, like terminal illness and accidental death cover.
Should I take out funeral insurance or life insurance?
We believe it’s important that you carefully consider your needs and budget before taking out funeral or life insurance. While we can’t tell you which is better for you, there are a few things to consider.
Since they’re underwritten differently, you may be able to take out a funeral insurance policy even if you’re ineligible for life insurance (e.g. those who may be over the entry age for life insurance or have an adverse medical history). Those who don’t need to cover more than the cost of a funeral might also find funeral insurance to be more appropriate.
On the other hand, life insurance can help cover both funeral expenses and any other costs that can impact your loved ones should you be diagnosed with a terminal illness or pass away.
To see if life insurance could suit your needs, try comparing policies through our free and easy-to-use comparison tool. It takes just minutes to compare a range of life insurance policies and get a quick quote from some of Australia’s top insurance brands.
Before deciding to take out funeral or life insurance, it’s recommended that you check the relevant Product Disclosure Statement (PDS) and Target Market Determination (TMD) for the full details of a policy to see if it’s right for you.
Meet our life insurance and income protection expert, Steven Spicer
As the Executive General Manager of Health, Life and Energy, Steven Spicer is a strong believer in the benefits of private cover and knows just how valuable the peace of mind that comes with cover can be. He is passionate about demystifying the health insurance industry and advocates for the benefits of comparison when it comes to saving money on your premiums.
Want to know more about life insurance?
1 ASIC, Moneysmart – Paying for your funeral. Accessed February 2024.
2 ASIC, Moneysmart – Funeral insurance. Accessed February 2024.