Money

Meeting those final bills

Paul Clitheroe.
Paul Clitheroe.

LIKE many western nations, Australia has an ageing population. This has fuelled the growth of products and services pitched at senior Australians - like funeral plans and funeral insurance, which are openly marketed these days, something that was unthinkable not all that long ago. 

No one likes to think or talk about their own death but, if you feel inclined to do so, it can make sense to discuss your final wishes with family members. Letting them know the type of funeral you'd like or your preference for burial versus cremation for instance, means your family don't have to make more difficult decisions at a time of extreme grief.

It is also important to think about how these final bills will be met because funerals don't come cheap.

On average, a funeral costs somewhere between $4,000 and $7,000, and footing the bill can be a challenge. Life insurance payouts may take a few weeks to be finalised, and probate (when the court validates a person's will) can take even longer. It means your family could be left funding the expense and the reality is that for many people this can be very challenging.

In some circumstances, family members may be eligible for a financial helping hand from government organisations like Centrelink and the Department of Veterans Affairs (DVA). However this assistance is generally only available if the deceased was a recipient of Centrelink or DVA support payments.

This being the case it's not surprising that a range of different funding options are being marketed to cover funeral expenses. It may seem a morbid topic but as with any financial product, it pays to be aware of the upsides as well as the pitfalls before committing your cash.

One option is prepaid funerals. These let you choose the type of funeral you would like, and either pay for it in full in advance, or pay it off over a period of time. Some states require prepaid funerals to be registered with the department of consumer affairs or fair trading. So check with the relevant department in your state or territory to ensure you're dealing with a legitimate organisation.

An alternative is funeral bonds. These offer a tax free investment that can only be accessed after your death. It can be an appealing option for retirees as money invested in prepaid funeral plans or funeral bonds is usually excluded from the age pension assets test.

Another option is funeral insurance. The idea is that you sign up to a policy, making monthly payments to cover funeral costs up to an agreed value. The younger you are, the lower the premiums, however it is important to check that after years of paying premiums you don't end up paying more than a funeral could cost.

With some insurers, a male aged 46 can expect to pay premiums of $11 each month to purchase funeral cover worth $5,000. For a 66-year old man, the premiums can be around $40 per month.

No matter what sort of financial product you use, be sure to tell someone you trust, such as your executor, that you have made plans. There's not much point in paying for funeral insurance if no one knows you have a policy in place.

For more information on meeting the costs of a funeral, check out the government's Money Smart website (www.moneysmart.gov.au).

Paul Clitheroe is a founding director of financial planning firm ipac, chairman of the Australian Government Financial Literacy Board and chief commentator for Money magazine. For more information, visit www.paulsmoney.com.au
 

Topics:  bills death funerals opinion paul clitheroe


Stay Connected

Update your news preferences and get the latest news delivered to your inbox.

Heatwave to continue for days as temps top 40 in some areas

Beachgoers cool down at Surfers Paradise on the Gold Coast. Temperatures have hit 46 degrees Celsius in parts of outback Queensland today, with a heatwave predicted for the state's central and southern regions.(AAP Image/Dan Peled)

Outback towns scorching under the Friday afternoon sun

Centrelink, Medicare, Child Support to be hit by strikes

Centrelink will be hit by industrial action.

Customers being urged to look at alternative options

Heatwave fatalities? Ambos' warn of heat stress danger

As the heatwave strikes, make sure you keep cool.

PARAMEDICS fear the looming Queensland heatwave could kill

Local Partners

Car stolen from business

Police would like to talk to them in relation to a crime in Logan.

Man builds playground entirely out of packing tape

Artist Eric Lennartson is in the process of completing his huge tape sculpture at the Ipswich Art Gallery.

VIDEO:And here's where you can play on it.

Countdown to Woodford Folk Festival begins

ECONOMIC BOON: Woodford Folk Festival is celebrating its 30th anniversary this year.  Photo Contributed

The first larger-than-life inhabitants have stepped into Woodfordia

'I need to do what I can': 65km walk for cancer patient

Karlee Robinson is walking from Caloundra to Noosa for her cousin Aaron Parker, who has terminal brain cancer.

What do you do when someone you love has terminal brain cancer?

ABC's Fresh Blood graduates are a Skit Box full of laughs

Sarah Bishop, Greta Lee Jackson and Adele Vuko in a scene from the TV series Wham Bam Thank You Ma'am.

ALL-female comedy trio hitting the mark with new sketch show.

Kim Kardashian West said to be looking for a divorce

Kim Kardashian West is looking to file for divorce from her husband

HBO announces which show will replace Game of Thrones

Diana Rigg, Natalie Dormer, and Hannah Waddingham in a scene from Game of Thrones.

Game of Thrones is definitely not coming back next April

Adele's Carpool Karaoke biggest viral hit on YouTube in 2016

The video has already attracted more than 135 million views

What's on the big screen this week

TJ Miller and Jason Bateman in a scene from the movie Office Christmas Party.

A COMEDY about a rowdy office Christmas party hits cinemas today.

MOVIE REVIEW: Moana is an original adventure in paradise

The character Maui (Dwayne Johnson) in a scene from the movie Moana.

One Boxing Day animated film has a heart as big as the Pacific Ocean

Council opens up on 'secret' private development companies

Ipswich City Council Administration Building, South Street, Ipswich. Photo: Claudia Baxter / The Queensland Times

New website launched by Ipswich City Council

INSIDE STORY: The highlights of your $150 million CBD

GRAND PLAN: The highlights of the Ipswich CBD redevelopment and where they will be located.

Work on city heart's radical transformation to begin next year

VOTE IN OUR POLL: Sand mine opponents face serious dilemma

Public meeting for the proposed sand mine at Maroochydore last week.

Coast MP calls on Minister to stop KRA proposal with stroke of a pen

Developer's grand new multi-million dollar estate

NEW ESTATE: This is the only plan revealed by the property developer's new Billabongs Estate in Agnes Water.

DEVELOPER given the go ahead for a massive estate with 149 homes.

Couple's desperate $550K price drop to sell Gladstone home

Brian Headley and Kirstene Staib are selling their Kin Kora mansion for $750,000.

TELL tale sign of Gladstone's property market.

Ready to SELL your property?

Post Your Ad Here!