Many people are opting for cremation, which may be as expensive as $10,000. Preparing for the inevitable by purchasing funeral bonds in Australia or a pre-paid funeral plan assures that you are financially secure. Even if the death was foreseen, the expense of the burial might frequently surprise families. Unfortunately, one-third of Australian seniors face financial difficulties because they do not have sufficient savings or estate assets to fulfil their last expenses. When you forethought your funeral, there are a few options that you may take advantage of right now.
When it comes time for your loved ones to organize your funeral, knowing that you have set aside money to cover the costs will give you a sense of security. Making educated judgments about your last goodbye can also enable you to understand all of the alternatives open to you.
Investment products that help you save for a funeral are known as “funeral bonds”. It is only when the account holder has passed away that the money invested is freed from the control of the burial fund. A funeral bond may be funded in two ways: with a one-time payment or by making recurring monthly payments until the bond value you choose is met. A pre-paid funeral product’s funds are stored in the customer’s name in a funeral bond, leading to confusion. Basic pre-paid funeral plans, for example, have monies kept in a funeral bond with the Australian Friendly Society with the Bendigo Bank.
For the sole purpose of paying for your funeral, funds held in funeral bonds are invested in your name. It’s not possible to access the money in funeral bonds until the account holder has passed away. The deceased’s estate will get any leftover money. Because each funeral bond is tailored to a unique product, the terms will vary. For each funeral bond, a product disclosure statement will be sent, outlining the details of the policy. The Australian Friendly Society Disclosure Statement, for example, has further information on the bonds in which you invest Bare pre-paid funeral clients’ monies.
Australian law governs the firms that administer funeral bonds. If you don’t want to stress organizing a memorial ceremony, pre-paid funeral plans are a safe solution. As a result, funeral bonds promote saving since money may only be accessed for funeral expenses. Purchasing a funeral bond is similar to buying a stock. Over time, the money should continue to grow more significantly than it would in a traditional savings account. Funeral bonds are exempt from Centrelink’s assets and income criteria for Australians on the Aged Pension, up to a specified amount of money deposited in the bonds. The current threshold for the Centrelink funeral bond is $13,500 as of July 1, 2021. The Funeral Bond Allowable Limit is re-evaluated every year by the Department of Social Services. This also provides you with the option of choosing your funeral director.
If you’re an older Australian who wants to arrange for your funeral, you may also be considering the advantages and disadvantages of funeral bonds and funeral insurance. On the other hand, a funeral bond keeps your money safe until it is required for your funeral, unlike funeral insurance, which pays you a lump sum at the time of death. Funeral insurance, on the other hand, requires a long-term commitment from the insured. Insurance prices tend to rise as you become older, making it unaffordable for many older adults. If you stop paying your funeral insurance premiums, the policy will be terminated, and you will lose every dollar you have invested in it. You may end up spending more on funeral insurance than you get back if you live a long time.
Funeral bonds in Australia and pre-paid funerals are safe solutions to alleviate some of the financial burdens on your loved ones who will be tasked with making funeral arrangements in the future. Funeral insurance is a scam since the money is stored in your name until they are required for your funeral. A third of Australian burial insurance plans are never paid out, which is concerning. Investing in a funeral bond is a risky move, so be sure to read the disclosure statement thoroughly before deciding.
Author Bio: Ellen Hollington is a freelance writer who offers ghostwriting, copywriting, and blogging services. She works closely with B2C and B2B businesses providing digital marketing content that gains social media attention and increases their search engine visibility.