Funerals are never easy, but they are an event that we must all eventually take part in and they can be a financial burden for family at a particularly sensitive and emotionally challenging time.
One option for meeting the financial costs and reducing the stress involved, is to prepay the funeral. This is a concept that appears to be enjoying growing acceptance, however, there is still some ambiguity about the true benefits of prepaid plans, how they work and whether there are risks involved.
We talked to Davina Bambrick, who is General Manager QLD Funerals of Invocare, a major funeral services provider that arranges prepaid funerals through a plan called Guardian.
Davina explains the main advantages of entering into a prepaid plan. “It’s more than just finances. A planned funeral allows you to consider alternatives and make decisions regarding your own passing, giving you the confidence in knowing that your affairs are in order and your final preparations have been made. It also provides peace of mind to you, your loved ones, and your family by taking away any uncertainty.”
Beyond the family and financial concerns associated with a funeral, you are able to make decisions regarding how the event goes ahead. You can decide on cremation or and even whether or not the service is conducted at a particular crematorium or cemetery.
Unfortunately, there have been media stories where families expected that the cost of a funeral was covered, but their expectations were not met. To put it quite bluntly, this raises anxieties such as:
- What if the the costs of the funeral change over time?
- Is the money safe for the next 15 years or more before the funds are needed?
- What if the funeral director goes out of business?
- What if I move to a place the provider does not offer funeral services or move interstate?
Davina explains some of the safeguards. “It is sensible to ask all of these questions before opting for a prepaid funeral. The type and style of the funeral are documented and written up in a contract before being paid at today’s prices. I can only comment on the Guardian product. In this case you are protected against inflation and price increases because no further charges are made on the items selected by you for your funeral plan contract. The plan price of your funeral is fixed forever, so you know that when you pass, the price will not go up and your family will not be faced with any unexpected bills associated with the funeral. No hidden costs. The only charges that will be applied are for modifications to the original contract.”
In terms of the security of the funds, according to information from the Australian Funeral Directors Association, “The money you pay for your pre-paid funeral plan is held by an independent entity and therefore is completely protected. It is invested in a separate fund in your name. It is not accessible by your funeral director until your funeral service has been provided.”
For the concerns about moving interstate, Davina explains that, “If you move interstate your plan may be able to be transferred to another of the plan’s participating funeral directors or providers. You are also able to cover the added expense of repatriation to your home town should your death occur while you are away from home.”
Beyond the concept itself and the safety of funds, there are also a number of practical questions that people have about how the whole process works. According to Davina, the most common concern is about payment methods.
“Because you are paying for the funeral now, some clients may be concerned about the outlay for the funeral expenses. However, once the price of a plan is agreed, with Guardian you can either pay in full; or pay with an initial upfront payment, followed by regular monthly installments for up to 36 months.”
Another frequent question is how do next of kin know that there is a prepaid funeral in place? The details of your plan can of course be included in your will, or the contract filed with other documents that will be needed at the time, but Davina also recommends, “Talk to your family. Tell them that you have documented your wishes and prepaid your funeral.”
Funeral planning is an important part of celebrating life, and communicating such things allows your friends and family to spend time celebrating your life instead of stressing at the cost associated with a funeral. Explore your options, discuss your plans, and find peace of mind for when the time comes for you to rest in peace.
Ultimately, when the time comes, pre-paid plans can help loved ones focus more on the life that has passed, rather than the details of a funeral.
This article does not constitute financial advice, you should take independent professional advice in relation to your own circumstance, before entering into a contract or other arrangement of any nature and it is critical to read and understand the PDS of any product or service you may be contemplating buying, prior to making any commitment.