The TV ads for funeral insurance are not our recommended way of pre-planning your funeral. You can safely invest up to $11,000 each in a funeral bond which is exempt from Centrelink Assets Test.
Large insurance companies spend fortunes on TV advertising enticing people to take out funeral insurance. At first this might sound reasonable, but insurance only provides cover while you are paying the premiums. John has met families who have unfortunately paid more in insurance premiums than the expected payout, and once you stop paying the premium, you are left with no cover at all. One couple he met had paid $15,000 in insurance premiums over the years, and their total payout was only $6,000. They had paid for their funeral times over.
For seniors, First Forest Funerals recommends investing in a Funeral Bond. A Funeral Bond is different to insurance. It is like a separate bank account where you contribute as much as you feel comfortable into a safe and secure fund. The money earns a little interest yearly (currently approx 3%) but it always remains your money and can only be used for funeral expenses. In addition, the Federal Government allows every Australian to invest up to $11,000 (which is usually more than sufficient to cover funeral expenses) and this money is exempt from the Centrelink Assets Assessment Test. If there remain excess funds after the funeral account is paid, First Forest will forward these back to the Estate of the deceased. We have done this a number of times over the years.
Having researched most products available, First Forest recommends Sureplan Funeral Bond. Sureplan started amidst the old PMG (remember the Postmaster General) and now run a reputable and professional financial service specialising in funeral bonds. For those under 55 years of age, they also have an attractive product that we can discuss further with you.