Thinking about your funeral, let alone prearranging it, is a difficult thing to do. However, it’s a really important thing to do, so you’ve made a good decision to look into options for preplanning your funeral.
Prepaying your funeral is one of the most convenient and financially sensible ways for you to plan your funeral. Prepaying or preplanning a funeral means that everything is taken care of in advance, and that your family won’t be financially burdened or unnecessarily stressed by having to make difficult decisions about the funeral when the time finally comes.
However there are traps to avoid, and so we’ve put together this guide to give you all the information you need to make the right decision.
This guide is broken down into the following sections:
- Why should I think about prearranging my funeral?
- What are the options for prearranging a funeral?
- What are the advantages and disadvantages of each funeral arrangement option?
- Why is prepaid the best option?
- How do I arrange a prepaid funeral?
- How to save thousands on prepaying for a funeral
- Frequently Asked Questions about prepaid funerals
PART 1: WHY SHOULD I THINK ABOUT PREARRANGING MY FUNERAL?
Death is not the easiest subject to talk about. No one likes to think about life without their loved ones, much less plan for it. Even so, planning for life after death can help alleviate some of the inevitable pain of losing someone close to you. Prearranging your funeral is one of the best things you can do for your family during one of the most difficult periods in their lives. Through careful planning and care, you can ensure that your funeral arrangements take place as you envisioned.
Death is a natural part of being human. We cannot control when or where death occurs, but we can help our families cope with the loss. It is true that thinking about dying and discussing funeral arrangements with loved ones is not the easiest thing to do, but it is important to have a plan. By taking on this planning, you can rest assured that your family will not bear the financial burden of expensive funeral costs during a time when they are most vulnerable.
We don’t like to think about our family being taken advantage of, but our better judgement is often absent during periods of grief. If we make these decisions on behalf of our families, we protect them from making poor choices on top of the financial challenges associated with upfront funeral costs.
We also want to make sure that we help our families with the emotional cost of losing a loved one. Planning a funeral is not only challenging and time-consuming in terms of paperwork, logistics and contacting friends and family, it is also deeply confronting. Everyone experiences grief differently but it is rarely easy. Imagine being faced with the responsibility of deciding how to best represent the life of a close friend, spouse, child or parent while also grieving their loss.
Although everyone is different, and there may be more or less advantages for some, there are three primary reasons why you should consider arranging a funeral in advance:
A. SAVE MONEY
This surprises many, but the average cost of a funeral in Australia is extremely high (currently around $7,499) and increasing significantly every year.
Already high, these prices are increasing at around 5% each year. If you’re planning on living for another 10-15 years, that means the average cost of a funeral could be $15,000 by the time it’s needed. That’s enough to put significant financial pressure on most families, particularly when already going through such a difficult time.
Prepaying a funeral means that you lock in today’s price, and pay only today’s price, whether it’s need in 5, 10 or 20 years time.
B. SAVE YOUR FAMILY FROM UNNECESSARY STRESS
There is no way of knowing when, how, and under what circumstances a loved one will pass away. Prearranging a funeral is a way for you to support your family emotionally and financially during one of the most difficult times in their lives. You will be able to relieve your family of the pressure to make decisions about what you would have wanted and perhaps even minimise disputes between well-meaning, but grieving relatives. Preplanning eliminates the guesswork about where, how and what kind of funeral you would have wanted and allows your loved ones to focus on their own healing and coping processes.
Planning your own memorial service together with your family can actually be a heart-warming and joyful experience. Together, you can write the script for a celebration of your life in line with your passions and wishes.
Death may not be easy, but we can make it easier on others by including them in planning and relieving them of the burden of guessing our wishes.
You give your family a choice, something which rarely happens when talking about death. We have no way of knowing when it will happen, but knowing that there are plans in place, both financial and celebratory, make it easier when the time comes to create closure while honouring a life.
Paying for a loved one’s funeral is placing Australian pensioners in financial hardship.
C. MAKE YOUR WISHES CLEAR AND GO YOUR OWN WAY
One of the major benefits of prearranging your own funeral is the ability to clearly articulate your wishes prior to your death.
You can let your family know whether you prefer cremation or burial, for example, and outline what type of memorial best reflects your wishes.
This is particularly important for Australians who would prefer a different style of memorial to the traditional funeral home service. At Bare, we’ve helped individuals with ceremonies ranging from backyard BBQs, to beach scattering ceremonies to Viking send-offs. In each case the send-off was the most appropriate send-off for the individual, and it formed an important element in the grieving process for the family left behind.
“Prearranging a funeral ensures I get the send off I want, which is not a traditional service in a funeral parlour.” – Greg, Perth
You can’t control how your loved ones react to your death, but it is worth remembering that one of the most challenging aspects of death is the helplessness we feel when faced with circumstances we cannot control.
By involving your family in the funeral planning process, you can create a healthy outlet for their grief and anxiety. It will not take away the pain and suffering, but it will lighten the load. Moreover, giving them the opportunity to take a role in honouring your life will help them feel involved and give the memorial even greater meaning.
While it used to be hard to think beyond the traditional funeral services, many more people are choosing to organise memorial services that better reflect the life they lived. Prearranging your funeral and planning an alternative memorial may help your family cope with the loss because the experience of a unique memorial could help them reflect joyfully on your life and assist them in moving forward. From playing your favourite music to holding the service in a place which held special meaning for you and your family, your service can be anything you wish it to be.
PART 2: WHAT ARE THE OPTIONS FOR PREARRANGING A FUNERAL?
There are three main options available when preplanning a funeral. We outline these three options below as well as their pros and cons. It is worth reading carefully through each option to understand its implications. Funeral insurance, for example, may have the cheapest monthly payments but is not the most secure option for planning for a funeral. Instead, opting for a prepaid funeral is a more secure option to ensure peace of mind. Because once it’s paid, there is nothing more to pay.
Funeral insurance is an insurance policy that will give your family a lump sum payment to assist with the payment of a funeral and associated expenses. The average cost is approximately $50-$100 per month and your specific premium may vary based on your age, gender, health and the amount of cover you purchase. There are many different providers to choose from and it pays to shop around. For more information, read our article Funeral insurance vs prepaid funeral plan: What’s best for me? here.
PREPAID FUNERAL PLANS
A prepaid funeral is a contractual agreement between you and a funeral home or provider where you make a lump sum payment (or through instalments) to cover the costs of funeral services in the future. This money is later used to pay for your funeral. You ordinarily have the opportunity to lock in a price and save money over the long term.
A funeral bond is an investment product used to facilitate the payment of costs associated with a funeral. Funds can only be withdrawn after your death. Money is usually invested through an investment company or directly from a funeral director who invest the funds on your behalf. There are risks associated with inflation and rising funeral services which may require your family to step in to cover the difference.
PART 3: WHAT ARE THE PROS AND CONS OF EACH OPTION?
While funeral insurance was once popular among Australians, it does present serious risks, and is increasingly the subject of negative press. Insurance companies are unlikely to lose on an inevitable situation and you will likely pay much more over time in your premiums than you would for a funeral service.
PROS OF FUNERAL INSURANCE
- Potential lower fortnightly cost.
- Cash payout into your estate at the time of passing.
CONS OF FUNERAL INSURANCE
- Paying insurance for something which will inevitably happen is only advantageous to the insurance provider. You will likely pay more than the final cost of the funeral.
- Premiums will increase over time as you get older, making the total cost very expensive.
- If you can’t pay your premiums, you receive no refund for premiums already paid (you forfeit all monies paid).
- Funeral Insurance doesn’t allow you to preplan your desired memorial, it simply acts as a financial payout to assist your family in paying for your funeral
- Many policies are limited to accidental death in the first two years. This means you are not covered if you have a terminal illness.
- Insurance payouts take time and paperwork for families to receive payment.
Prepaid funerals offer numerous advantages with fewer risks than insurance. They are also the only option of the three where you can actively plan and “lock in” your desired memorial prior to death – the others are simply financial payouts.
PROS OF PREPAID FUNERALS
- Costs remain the same. You prepay the cost of the funeral in today’s dollars even if your funeral is not for years to come.
- By preplanning your funeral / memorial service in advance, you remove the emotional stress of planning a funeral from your family
- Amounts paid for a prepaid funeral plan are exempt from the assets test, so they can help you obtain a full or part pension if you might otherwise exceed the assets threshold.
- You choose the type of funeral you want. From casket to flowers, music to event size.
- You can pay in instalments over time.
- Most prepaid funerals come with a 30 Day Cooling Off period if you change your mind.
- The total cost is often cheaper than funeral bond or funeral insurance if you live another 5-10 years.
CONS OF PREPAID FUNERALS
- You need to check whether the contract is valid in other states and territories. You may not be able to transfer to different providers.
- Exclusions apply – check your terms and conditions in case you change your mind.
We’ve listed some of the advantages and disadvantages for funeral bonds below. The main risk associated with funeral bonds is your family being required to step in to cover the difference between unfinished instalments, inflation, and increases to the cost of funeral services.
PROS OF FUNERAL BONDS
- Funeral Bonds are exempt from asset and income test (as long as they are within the Funeral Bond Allowable Limit).
- Possible to pay in advance and possibly grow your savings over time.
- No lock-in contract with a funeral director.
CONS OF FUNERAL BONDS
- If you pay in instalments, and die before the bond is fully paid, you will only receive what you paid for.
- Funeral costs may increase over time. A funeral bond will not lock in the funeral costs and your family will be required step in to cover the costs.
- Depending on the amount you contribute and the investment performance of your funeral bond, the final payout may not be enough to cover all of your funeral expenses.
PART 4: WHY ARE PREPAID FUNERAL PLANS THE BEST OPTION?
A prepaid funeral is one of the best ways to plan for your funeral. It’s a financially secure decision that can provide you with peace of mind knowing that your family won’t be burdened or unnecessarily stressed with planning decisions when the time finally comes.
As described above, there are two clear advantages of a prepaid funeral that, we believe, make it clearly the best option when prearranging your funeral.
LOCK IN A PRICE IN TODAY’S DOLLARS
As outlined above, there are some serious financial risks associated with funeral insurance and funeral bonds:
- Funeral insurance premiums rise as you get older, meaning that the total cost paid is much more than the benefit you receive.
- If you miss any payments on funeral insurance (for example, as you get older and premiums rise), your cover is usually invalid and you do not receive any payout.
- In many cases, the payout of a funeral bond is not sufficient to cover the funeral costs, which occasionally means that families are left with more to pay.
- Prepaying your funeral gives both you and your family peace of mind. You lock in the cost of the funeral in today’s dollars and, once all instalments are paid off, there is nothing for your family to pay. The service is arranged directly with the provider without the stress of pulling together cash in an emotionally stressful time.
CONTROL OVER YOUR WISHES
Unlike both other options, prepaying your funeral also gives you the freedom to design the service you want, protecting your family from the burden of decision-making while emotionally drained. You can design every element of the service according to your own desires while also fielding suggestions from those closest to you. The end result is a collaborative experience that honours a life while making space for all those who loved the deceased.
PART 5: HOW TO ARRANGE A PREPAID FUNERAL?
There are three primary steps involved in prepaying your funeral, we’ve outlined a summary of each of the key steps below.
CHOOSE A FUNERAL DIRECTOR
Choosing a funeral director may seem overwhelming. It is not something that people generally have had to consider until it becomes a necessity. However, there are some general guidelines you can choose to follow to help you with your selection.
When choosing a funeral director, there are generally three things to consider:
- are they supportive of your wishes?
- can you trust them when the time comes?
- do they fall within your budget?
The first two above can be best solved by speaking to the funeral director, reading through their website and seeking out the opinions or experiences of others. It’s also important to think through this decision with your memorial preferences in mind. For those that prefer a more traditional service, you’re likely best served reaching out to a traditional funeral home. On the other hand, for those wanting a less traditional ceremony, the same traditional homes are less likely to be a good fit for you.
When considering pricing and budget, there are a couple of things to be aware of. The first is the total price, as obviously this will impact your ability to afford a prepaid funeral. Generally speaking, a prepaid funeral is broken up into three costs:
Prepaid administration fee (the cost of setting up a Trust to hold your money until death)
- Service cost (the cost of the funeral you have selected)
- GST (all prepaid funerals are subject to GST)
You should ask your funeral director for a breakdown of these fees, to ensure you’re not getting burdened with any hidden charges. You are also entitled to a breakdown of the Service Fee, to ensure you’re not getting charged excessive “professional fees” or coffin markups.
To help with your research, here are some cost benchmarks for you to use:
- On average, prepaid administration fees should range from $250 – $500. Anything more than $500 is very high and should be negotiated down
- The service cost can vary wildly, and will depend on your location and what type of ceremony you would like. A direct cremation (the simplest option) will cost around $2,000 – $3000, but a traditional ceremony with burial may cost up to $20,000
- GST is typically included in the cost quote, be wary of any quotes where GST is added on top of the listed price.
- Once you’ve chosen a funeral director, make sure to share your decision with your next of kin to facilitate the process.
DETERMINE THE TYPE OF FUNERAL YOU’D LIKE
Once you’ve selected a funeral director, you can start thinking about the type of service you would like. This is completely up to you, but you may wish to involve family members. As discussed above, involving family members can become part of the healing process, facilitating acceptance and, eventually, closure.
While you may have only attended traditional funerals in the past, do not let this stop you from considering alternatives that better reflect your personality and life. If there is a special piece of music, activity or place in the world that better sums up your experience on earth, then that may be a better option for you. Preplanning your funeral allows you to completely customise the experience and say goodbye in your own way. It also takes the stress away from your family who may be unsure about your wishes or be too emotionally vulnerable to make the decision themselves.
CHOOSE UPFRONT OR INSTALMENTS
Many funeral directors allow you to pay upfront or instalments to assist with cash flow and make prepaid funerals accessible to everyone. There are fewer risks associated with this approach because you lock in a price while still taking advantage of the cash flow benefits associated with insurance premiums and funeral bonds.
PART 6: HOW TO SAVE THOUSANDS PREPAYING YOUR FUNERAL
With the cost of funerals increasing every year, and even some prepaid options costing many thousands, below are some helpful tips to help you save thousands when prearranging a funeral.
PAY EARLIER VS. LATER AND LOCK IN TODAY’S PRICE
One of the main benefits of prepaying a funeral is the opportunity to lock in a future funeral at today’s prices. This means that the earlier you prepay, the greater your savings.
CONSIDER CREMATION OVER BURIAL
Burial can be as much as four times more expensive than a cremation, particularly in metro regions. The cost of a grave plot varies based on a number of factors, including location, section in the cemetery, type of burial plot and term of the right of interment. In Sydney, for example, the cost of a cemetery plot has doubled over the last five years. At Waverley Cemetery, the cost of a lawn grave starts at $21,200 and rises to $52,000 for more elaborate options.
Moreover, most terms of interments are only for 25 or 50 years. This means that a family member will be given the opportunity to renew the licence for a further term – at a cost. Add on the typical cost of a burial at up to $4,500 plus a coffin which usually ranges from $800 to $10,000. By contrast, a cremation usually costs no more than $4,000 which involves use of the crematorium facilities and staff labour.
CONSIDER DIRECT CREMATION AND THE CHANCE TO CREATE YOUR OWN NON-TRADITIONAL CEREMONY
Direct cremation differs from a traditional cremation in that the latter usually involves a funeral director and a formal ceremony and viewing. On the other hand, a direct cremation is offered without a funeral director or viewing, and families take control of the memorial service. To give you a comparison, Bare offers services starting at *$1,299 in contrast to the $4,000 cost associated with traditional cremations.
*This is the at-need price correct at the time of writing, for metropolitan Brisbane and the Gold Coast region where there are lower government fees and operating costs. However, prices vary depending on location and are subject to increase over time. For an accurate quote and cost breakdown for your area, visit our website.
TAKE ADVANTAGE OF THE TAX BENEFITS
Prepaying a funeral does not impact aged pension entitlements nor is it included in an income or asset test. This allows you to make arrangements without affecting your government entitlements later in life. This is an important question to consider when making financial arrangements so make sure you do talk to your financial advisor and gain independent advice.
PART 7: FREQUENTLY ASKED QUESTIONS
Am I eligible to purchase a prepaid funeral plan?
Yes. Unlike other funeral planning products, anyone is able to purchase a prepaid funeral plan, regardless of their age or health.
WHO HOLDS ONTO THE MONEY I PAY?
When you pay the funeral director, they are required to deposit this money with an authorised and independent institution (such as a friendly society or investment manager). While timing requirements vary between states, a funeral director is generally required to arrange this payment within 7 days of receiving the money.
When the holding entity receives the funds, they are required to notify you in writing, and should detail the exact amount of the funds received. If you do not receive such a confirmation you should follow up with your funeral director.
WHAT IS A DIRECT CREMATION?
Simply put, a bare cremation is a simple cremation without a formal ceremony, funeral director or viewing. It is an affordable option which allows families to personalise the memorial service. You can collaborate with those closest to you to create your own narrative and celebrate a life in a unique way which better reflects someone’s personality than a traditional ceremony.
WHAT IS THE PRICE OF A BARE CREMATION?
Bare Cremation offers a simple, affordable option for saying goodbye to a loved one without compromising on the level of care. The price of a Bare Cremation starts at $1,699 (this is the price for metropolitan Brisbane and the Gold Coast region where there are lower government fees and operating costs). Personalised quotes are recommended due to differences in each state and territory. You can get a quote and cost breakdown for your location by entering your postcode on our website here.
HOW CAN I PERSONALISE MY SERVICE?
There are no limits. You can choose to hold a service wherever you like and with how many people you like. Why not take advantage of Australia’s natural beauty, your own backyard or somewhere your loved one adored? There is no government or private fee to scatter ashes or you can choose to keep your loved one close by in an urn.
IS THE BARE CREMATION PROCESS SIMPLE?
Absolutely. Get a quote in seconds and arrangements can be made in as little as 5 minutes with no visits to a funeral home or phone calls required. We collect the deceased from their place of passing and our support team is on deck 24/7 to help you with any questions you might have. Afterwards, we return the ashes by registered mail or hand-delivery and register the death as well as obtain copies of the death certificate on your behalf.
ARE THERE INSTALMENT OPTIONS AVAILABLE?
Yes, we offer monthly instalments to allow everyone access to affordable funeral services. However, if you are unable to afford monthly instalments, please call us in 1800 951 897 to discuss your options.
WHAT IF INSTALMENTS ARE NOT FULLY PAID PRIOR TO PASSING?
We will commence your service and undertake collection and the paperwork process to minimise unnecessary suffering for your loved ones. We will then coordinate with your next of kin to pay the balance due – at the price you locked in when you began your instalments.
ARE THERE ANY EXTRA FEES?
There are no extra fees once you have locked in your prepaid funeral. The only instance where there would be additional fees is if you pass away in a different region to your address. In this scenario, there may additional transport fees payable.
DO YOU PROVIDE AN ITEMISED BREAKDOWN OF THE SERVICES?
Yes. Your contract will provide a line-by-line breakdown of each service and its cost.
SHOULD I LET MY NEXT OF KIN KNOW ONCE I HAVE MY CONTRACT?
Yes. By ensuring your Next of Kin knows and understands your wishes, you will be able to prevent any unnecessary pain and suffering when you pass. If you are in an aged care facility or hospital, it is also a good idea to let someone know that you have a contract with Bare Cremation and pass on our contact details so they can contact us straight away.
WHAT IF I CHANGE MY MIND?
There is a thirty-day cooling off period during which time you may change your mind. If you cancel your contract within this 30-day period, you will receive a full refund.
WHAT IF I DIE AWAY FROM HOME?
In this instance, your family will need to touch base with us to arrange for transport to ensure timely collection. We will make all the necessary arrangements, but there may be some additional costs to cover transportation.
WHAT IF YOU GO OUT OF BUSINESS?
The investment value of your prepaid contract is invested in a regulated Fund with the Australian Friendly Society. As a member of the Fund the investment value is held in your name and we can only access the funds on your passing as part of the pre-paid contract. In the very unlikely event that we are not in business when you pass away the investment value at that time would either be paid to your Estate or paid to another Funeral Director at the direction of your Executor to contribute to your funeral expenses.
FINAL THOUGHTS ABOUT PREPAID FUNERALS
We hope this guide to prepaid funerals has provided you a better understanding of the process.
If you’re interested to know more, you can read our Complete Guide to Planning a Cremation here; or for answers to some of our Frequently Asked Questions, read our article Every question you want to ask about Bare prepaid funerals answered.
Click on the below button to obtain a quote and cost breakdown for your location. If you have any further questions, visit the Bare Cremation website or call 1800 202 901.
Our Bare Law team can also help with Wills and estate planning, on (03) 9917 3388.