You've probably seen the ads. A reassuring voice. Smiling grandparents. "From just $1 a day, protect your family from the burden of funeral costs."
It sounds sensible. And for some people, funeral insurance is the right choice. But for most Australians — especially pensioners — the reality is much less straightforward than the advertising suggests.
We're going to walk you through both options honestly. Not to sell you a prepaid funeral plan (though we do offer them), but because too many people are paying premiums they'll never benefit from, and nobody is telling them.
What the ads don't tell you about funeral insurance
Premiums rise every year
Funeral insurance isn't a fixed cost. Your premiums increase as you get older — often significantly. A policy that costs $20 per week at age 60 might cost $45 per week at age 75. And by then, cancelling means losing every dollar you've already paid.
Most policies are never paid out
Industry data indicates that only around one in three funeral insurance policies are ever paid out. The rest are cancelled before a claim is made — usually because the policyholder can no longer afford the rising premiums. That's years of payments with nothing to show for it.
There's a waiting period
Most policies have a 12-month "accidental death only" period. If you pass away from illness within the first year, your family receives nothing. With a prepaid funeral, you're covered from day one.
The money might not go to your funeral
Funeral insurance pays a lump sum to your nominated beneficiary. They can spend it on anything. There's no guarantee it covers your funeral, and there's no arrangement in place for what your service looks like. Your family still has to make all the decisions during grief.
The mathematics — what you actually pay
Example: $10,000 funeral insurance policy taken out at age 62
Year 1 premiums: ~$1,040/year ($20/week)
Year 10 premiums: ~$1,820/year ($35/week) — premiums have risen
Year 15 premiums: ~$2,340/year ($45/week) — harder to afford on a pension
Total paid over 15 years: approximately $23,400
Payout if you pass at age 77: $10,000
You've paid $13,400 more than you'd ever get back. And if you cancel at any point, you get nothing.
Premium figures are illustrative based on typical Australian funeral insurance products. Actual costs vary by provider, cover level, and individual factors. For current comparisons, visit ASIC's Moneysmart — Funeral Insurance.
Funeral insurance vs prepaid funeral plan : side by side
| Feature | Prepaid Funeral | Funeral Insurance |
|---|---|---|
| What you pay | One payment (or short-term instalments) | Ongoing premiums that increase yearly |
| Total cost over time | Fixed — e.g. $4,260 for direct cremation | Can exceed $20,000+ over your lifetime |
| Funeral arranged? | ✔ Yes — all decisions made | ✘ No — family still has to organise everything |
| Price locked? | ✔ Yes — today's price, forever | ✘ No — premiums rise, payout may not cover costs |
| Centrelink asset test | ✔ Exempt — no limit | Varies — some policies assessed |
| Covered from day one? | ✔ Yes | ✘ No — 12-month waiting period typical |
| If you cancel? | Cooling-off period; refund provisions in WA law | You lose everything you've paid |
| Money goes to | Your funeral — guaranteed by contract | Beneficiary — no guarantee it covers the funeral |
| Family burden | Minimal — just one phone call | Significant — claim process, then plan entire funeral |
When funeral insurance might be the right choice
We believe in honesty, so here's when insurance can work:
You can't afford a lump sum. If paying $4,260 upfront isn't possible and short-term instalments don't suit your budget, low-cost funeral insurance might bridge the gap — provided you understand the long-term cost. You could also ask about our funeral plan payment options.
You want general life cover, not just funeral cover. Some over-50s life insurance policies provide broader coverage. If funeral costs are only one part of what you want to protect your family from, insurance may be appropriate.
You're relatively young and healthy. If you're in your 40s or early 50s, premiums are lower and you may get good value over a shorter period before converting to a prepaid plan later.
For everyone else — and especially if you're on the Age Pension — a prepaid funeral typically delivers far better value and far less risk.
What the consumer advocates say
CHOICE (Australia's leading consumer advocacy group) has investigated the funeral insurance industry and raised concerns about vulnerable Australians being targeted by policies that are unlikely to pay out.
ASIC's Moneysmart notes that prepaid funeral products can be "much cheaper than purchasing funeral insurance if you live for five or ten years after you purchase the plan."
The Financial Services Royal Commission investigated funeral-plan providers amid claims of unethical practices, particularly in vulnerable communities.
Already paying funeral insurance premiums?
Don't cancel anything until you've done the maths. Here's what we suggest:
Add up what you've already paid. Check your statements or call your insurer. Compare the total with the payout amount. If you've already paid more than the payout is worth, the numbers speak for themselves.
Check the cancellation terms. Some policies have partial refund provisions. Others don't. Know what you'd lose before deciding.
Talk to someone independent. Centrelink's Financial Information Service is free and doesn't sell anything. They can help you weigh up your specific situation.
Then come and see us. We'll give you a clear prepaid funeral plan quote so you can compare directly. No pressure — just information so you can make the best decision for your circumstances.
Frequently asked questions
Is a prepaid funeral better than funeral insurance?
For most Australians, especially pensioners, a prepaid funeral offers better value. You pay once, the price is locked in, your wishes are documented, and it's exempt from the Centrelink asset test. Funeral insurance premiums rise annually, and the majority of policies are cancelled before they pay out.
How much does funeral insurance cost per month?
It varies by age and cover level. A 60-year-old might pay $70-100 per month for $8,000-$10,000 of cover. That premium increases every year. Over 15-20 years, total payments regularly exceed the payout amount.
Can I switch from funeral insurance to a prepaid funeral plan?
Yes. Many people do. Check your insurance cancellation terms first, then come and talk to us about prepaid options. We'll help you compare the numbers clearly.
What happens to my funeral insurance if I can't afford the premiums?
If you stop paying, your policy lapses and you lose everything you've paid. There's no refund for premiums already paid. This is the single biggest risk with funeral insurance.
Is my money safe in a prepaid funeral plan?
Yes. In Western Australia, prepaid funeral plan funds must be held in a government-regulated trust account, separate from the funeral home's operating funds. Your money is protected by law until your funeral takes place.
Want to compare the numbers for your situation?
Bring your insurance policy details. We'll show you a prepaid quote side by side. No obligation.
Let's Compare or call 1300 69 79 89 any time