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Is Funeral Insurance Worth It in Australia?
Funeral insurance is one of the most heavily marketed financial products to older Australians — but it's also one of the most commonly criticised by consumer groups. Understanding the real cost is essential before committing.
The Key Problem with Funeral Insurance
Unlike life insurance, most funeral insurance policies have premiums that increase with age but a fixed cover amount. This means the total premiums paid can easily exceed the cover amount if you live a long life — effectively paying more than the funeral would have cost in the first place.
ASIC's Warning on Funeral Insurance
ASIC has repeatedly warned Australians about funeral insurance, noting that many policyholders end up paying more in premiums than the policy pays out. A 2018 ASIC review found many consumers were unaware their premiums would increase over time.
Better Alternatives to Consider
- Prepaid funeral plan: Locks in today's price — no ongoing premiums
- Funeral bond: Your money grows in a managed fund — can be Centrelink-exempt up to the threshold
- Dedicated savings account: Simple and fully flexible
Premium estimates are indicative only. Actual premiums vary significantly by insurer and individual health status. Always read the full PDS before purchasing funeral insurance.