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Funeral planning Sydney Pre-Planned Funerals Funeral Insurance

Many people are realising that Funeral Insurance may end up being an expensive way to cover the cost of a Funeral.

It is important that people understand the true cost of Funeral Insurance and the advantages of a Pre-Paid Funeral. TV Advertising for Funeral Insurance only tells you the price a younger person would pay for insurance. What many people don’t realise is that the premiums increase dramatically with age. An 82 year old can pay as much as $172 per month ($2064 per year) for $8000 insurance cover. Many people drop out of these insurance schemes because the large price increases as you get older make it unaffordable and of little value.

A review by consumer watchdog CHOICE, found consumers were paying significantly more in insurance premiums than the actual value of the cover. “A fifty year-old will end up paying over $140,000 in insurance premiums for a funeral worth $6,000.” Source: The $140,000 Funeral: The pitfalls of funeral insurance, Combined Pensioners and Superannuants Association, March 2011. cpsa.org.au

Many people don’t realise that when you stop paying the premiums, the insurance stops. There is no fund that builds up or is paid out when you leave. It is only insurance, so it has no value outside the insured period. You have to keep paying the premiums to keep the cover. So as people get older and they can’t afford the increasing premiums, they stop paying and end up with nothing after years of paying for funeral insurance.

Commissioner Ken Hayne said the fact that the claims paid were one third of the premiums, combined with 80 per cent of new policies being cancelled, suggested they “give little value to consumers”.

A Pre-Paid Funeral Plan is different to Funeral Insurance and allows you to pay the cost of a funeral over time.