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



SUNDAY SAY: Honour Earth's charter

A fisherman walks on the shores of the Arabian Sea, littered with plastic bags and other garbage, in Mumbai, India, Sunday, Oct. 2, 2016. India is scheduled to deposit the ratification instruments of the Paris Agreement on Climate Change with the United Nations on Sunday, the anniversary of Mahatma Gandhi's birth, who believed in a minimum carbon footprint. India accounts for about 4.5 percent of emissions. (AP Photo/Rafiq Maqbool)

Are we honouring our own writing on the Earth?

Clean Up Australia makes a comeback in Iluka

Clean up Australia Day.

Annual event to be held on the Saturday before the markets

Local Partners

Un-American tale makes Lion weakest link in Oscars line-up

PSYCHOLOGY researchers find US films and actors most likely to win accolades at the Oscars.

How to be spooky and sing like a man

Spooky Men's Chorale, looking a little less spooky, on Saturday morning at their masterclass.

A masterclass on how to be a spooky man (or woman).

Living End, Grinspoon stars hit stage for American Idiot

Chris Cheney of The Living End stars in the Australian production of Green Days musical American Idiot at Brisbane's QPAC Theatre.

TAKE a look behind the scenes of Green Day's American Idiot musical

Samuel L Jackson dismisses La La Land ahead of Oscars

Ryan Gosling and Emma Stone in a scene from the movie La La Land.

Hollywood actor and Oscars voter says Denzel should win top gong

Former Family Matters stare accused of child abuse

Reginald VelJohnson, left, and Darius McCrary arrive at the TV Land Awards on Sunday, April 19, 2009 in Universal City, Calif.

Darius McCrary has been accused of child abuse

Bindi Irwin's birthday tribute to her dad

Bindi Irwin

Bindi Irwin has paid tribute to her dad on his 55th birthday

The trick homeowners are using to buy more properties

Chantelle Subritzky leaves her home each week for Airbnb guests.

Queenslanders are going down this path to help pay their mortgages

Stunning home blends South Pacific beauty with Orient style

Immaculate residence with two outdoor living areas

Historic home 'Fairweather' up for action

Fairweather

Historic property owned for last 35 years up for sale

A piece of Clarence Valley heritage up for grabs

The historic house \"Ravensford\" located at 36 Villiers St in Grafton is currently on the market at McKimms Real Estate.

Take a look inside iconic home 'Ravenford'

$140k damage: landlord says property trashed, contaminated

He had what he calls "the tenants from hell"

Ready to SELL your property?

Post Your Ad Here!