Decoding funeral insurance benefits
Funeral insurance may be something you've only recently considered and you may have a few questions about its benefits and how it all works. In good news, we live and breathe insurance, so we're going to break it down like a deconstructed pav and make it clearer than Wellington on a bluebird day.
Understanding funeral insurance
At its core, funeral insurance is a very simple idea.
Basically, depending on your provider, you pay a fortnightly, monthly or annual payment (known as a premium, but more on that later), and should you pass away, your selected beneficiary will receive a lump sum to help pay for your funeral or other end-of-life costs.
Therefore, the way funeral insurance works is basically having a back-up plan to help your loved ones with the financial side of things during a tough time.
Plus, you can choose how much you’d want your funeral insurance benefit amount (the lump-sum payment) to be, up to a certain maximum amount which will be outlined by your provider. That means you can base your chosen benefit amount on what you think your loved ones may need when the time comes.
A glossary of funeral insurance terms and benefits
Here are some of the key terms you’ll see when dealing with funeral insurance, and what they all mean. You can find more comprehensive descriptions of the below terms in the OneChoice Funeral Insurance Policy Document.
- Policy: The official contract between the policyowner (you) and the insurance provider.
- Premium: The fortnightly, monthly or annual payments you’ll need to make for your chosen funeral insurance benefit amount.
- Benefit amount: The amount of cover you choose and the money your beneficiary/ies receive after your passing.
- Term (or duration): The length of your policy.
- Beneficiary/ies: The person (or people) you choose to receive the lump-sum payment (the benefit amount) when you pass away.
- Accidental Serious Injury Benefit: Depending on your provider and your policy, there may be a payout available if you experience an Accidental Serious Injury.
- Accidental Death Insurance: Depending on your provider and your policy, your beneficiary may receive an increased payout if your death was a direct result of an accident.
What are the advantages of funeral insurance?
The main benefit of funeral insurance is that it can help take the stress out of paying for your final goodbye. Your loved ones have enough on their plate, after all.
Depending on your wishes, funerals could be pricey. A lump-sum payment to your beneficiary/ies or estate can help gain the freedom to plan and pay for your chosen farewell without going further into financial strain.
Regardless of the benefit amount you choose; it can be a great help to have some cash to go towards the costs of your farewell.
Plus, there are also situations in which you could benefit from funeral insurance sooner than expected. If you had insurance and hit a major life road bump such as an accidental serious injury or terminal illness, you may be eligible to receive an early payout, depending on your provider.
What can funeral insurance cover?
Funerals could be costly. The Citizen’s Advice Bureau states that the average funeral can cost between $8,000 and $10,000, but it’s easy for prices to soar well above that. And there can also be other end-of-life expenses to take into account as well.
When thinking about what funeral insurance can cover, keep in mind, it’s totally up to you and your beneficiary. Generally speaking, once your beneficiary/ies receive the lump-sum payment from your insurance, it may be used for whatever expenses need to be paid for, such as:
- A tangi or a funeral service
- A casket or urn
- A headstone (these start at around $1,000)
- A plot in a cemetery (these can be thousands alone)
- Hearse hire
- Outstanding bills or debts
- A roaring party in your honour
Finding the right cover for you
If you are considering funeral insurance, the next step is to find a policy that really works for you and will provide the cover you require. Click for more information on OneChoice Funeral Insurance or if you’re keen to get started already, you can request a quote from one of our friendly staff.
19 Jan 2024