When it comes to organizing funerals, there is a lot of stress involved. From organizing a date and venue to making music and floral arrangements, the whole process can become overwhelming. At a time when emotions are running high, the last thing grieving families need to worry about is money.

With reports indicating that only 25% of seniors have their funeral arrangements in place for when they pass, it seems the right time to consider what the best way is to pay for a funeral. Whether individuals opt for a prepaid funeral, a funeral bond or funeral insurance, there is an option out there to save stress in the long run.

How much does a prepaid funeral cost?

When it comes to financing funerals, the prepaid option is seemingly the most straightforward. Under a prepaid arrangement, individuals will pay off funeral fees in full or in installments over a specific period of time, be it 12 or 60 months. With a set contract, individuals can also allocate their money in close detail.

Prepaid funerals have a distinct advantage when it comes to financing a funeral. This is because this option allows the individual full control over their service while also lessening the burden on loved ones. Another benefit of a prepaid funeral is the ability to make a payment that is set at today’s price. Therefore avoiding inflation as funerals are already expensive enough.

However, when organizing a prepaid funeral, individuals should be careful of making alterations. This is because changing your mind or transferring to a different provider simply may not be possible. Therefore it’s advisable to always read the fine print.

The location of the funeral will likely influence the cost. For example, a funeral in Perth on average may cost $7,764 while a funeral in Canberra rings in at $6,131. A Sydney funeral averages a cost of $7,621, compared to a Hobart funeral which averages $6,508. The average cost of a funeral in Melbourne costs around $7,586, compared to a cost of $7,259 in Brisbane and $6,657 in Adelaide.

How much do funeral bonds cost?

On the surface, funeral bonds seem similar to prepaid funerals, however, there are some differences. In essence, funeral bonds require that individuals invest money that is exclusively put aside to cover the cost of funeral expenses. The bond can be invested through an investment company or directly from a funeral director of the individual’s choosing.

With funeral bonds, it is important to note that the money is inaccessible until the person actually passes away. At the time of death, loved ones will be handed the lump sum to organize the service. Funeral bonds are a kind of forced savings that can only go towards one thing.

However, with funeral bonds, like any investment, there is the risk that the bond may fall behind due to inflation. This is because the price of the service may increase over time. Which in turn means that those left behind may be forced to cover a margin of the cost.

The cost of a funeral bond will ultimately depend on how much an individual wants to save and the time frame in which they want to save that money. The cost of a funeral bond can be paid in monthly instalments or a lump sum with the option for top-ups.

Under a monthly instalment, individuals will be required to contribute a minimum instalment each month, such as $50. For example, if an individual wanted to save $7,000 for their funeral in the space of 10 years, reaching this target would require an investment of $50 a month for the next 10 years.

Whereas under a lump sum payment, individuals are required to contribute a minimum lump sum amount, such as $500. Individuals then have the freedom to top up the funds at any time. Lump-sum funeral bonds typically require individuals to start with a $500 deposit with a minimum top-up of $42.

How much does funeral insurance cost?

Funeral insurance is typically included under the umbrella of other insurances. This means that after passing, the loved ones will receive the lump sum of money. However, they will be left to organize the service themselves.

Many in the funeral industry find funeral insurance kind of obsolete. This is because funerals are a certainty. Therefore any insurance policy has to charge the consumer more than the final cost of the funeral in order to be profitable.

It should be noted that funeral insurance can be beneficial to some people. A positive is a fact that funeral insurance doesn’t require having a conversation with loved ones about death. Instead, this insurance can be added to everyday expenses without anyone knowing.

The average cost of funeral insurance will depend on the individual’s age when they take out the insurance policy. For example, an annual premium for a 40-year-old is likely to cost $181.72, whereas the cost for a 50-year-old is $227.37. Once a person hits the age of 60, the policy is likely to cost $430.76. However, the price increases to $1,316.70 when the individual turns 70.

Paying for a funeral

While the options for financing a funeral may seem overwhelming, there is good news. Instead of leaving family members with a financial burden, individuals have plenty of options for financing their own funeral. Whether it’s through a bond, insurance or prepaid means, the right option is out there.

Talking about and even determining how to pay for a funeral may seem awkward or a bit of a hassle. Yet, planning early is a great way to ensure that some of the burdens are taken away from the family members left behind.