Step 2: Preparing Financially
In our opinion, the preferred method of preparing financially for your funeral is to open a Funeral Bond. These bonds are administered by Funeral Plan Management and come with the following benefits:
- Capital guaranteed investment
- Your money is held in your name
- Tax benefits – your bond is not counted as an asset by Centrelink
- From as little as $50 per month
Step 3: Know Your Options
Funeral Planning Options: A Guide to Your Choices
When planning ahead for a funeral, there are four main options to consider: funeral insurance, pre-paid funerals, funeral bonds, and pre-arrangements. Each comes with its own pros and cons, so it’s important to understand how they work.
1. Funeral Insurance
Funeral insurance may seem like a convenient way to cover funeral costs, but it often ends up costing much more than the actual funeral. With funeral insurance, you make regular payments—whether fortnightly, monthly, or yearly—to build up a fund for your funeral. However, over time, you might end up paying thousands of dollars more than the funeral will cost. The downside is that the premiums continue until you pass away, and the total amount paid may far exceed the funeral’s actual expenses.
2. Pre-Paid Funerals
A pre-paid funeral allows you to lock in your funeral arrangements by paying for them in advance. This means you can choose the details you want, such as a viewing, limousine, celebrant, and flowers. However, the major downside is that once paid, the money belongs to the funeral home, and you can’t get it back if circumstances change. For example, if your family later decides they don’t want the limousine or viewing, you’re still bound by the terms of the pre-paid contract. Additionally, many funeral homes charge an inflation fee to account for rising costs, meaning the amount you pay upfront could be more than the funeral is worth when the time comes.
3. Funeral Bonds (Recommended)
A funeral bond is a flexible and secure option that Hetherington Funerals strongly recommends. With a funeral bond, you make decisions about your funeral, much like with a pre-paid plan. However, unlike pre-paid funerals, the money you allocate to the bond remains in your name, even though it’s set aside for the funeral. This means that if your family chooses not to use some of the services you selected—such as the viewing or limousine—the remaining funds will be refunded to your estate. The bond is capital-guaranteed, meaning the money is safe, and any interest earned is yours. This makes funeral bonds a more flexible and cost-effective option in the long run.
4. Pre-Arranged Funerals
Pre-arranging a funeral is a good option if you want to make specific arrangements without paying in advance. This option allows you to plan the details of your funeral, such as service preferences and venue, but does not require any upfront payment. Pre-arrangements work well if you already have funeral insurance or if you have funds saved in a high-interest account. With this option, you retain control over your finances and can reassess your plans as needed.
