Pre-paid funerals have come under fire recently, with Choice, Australia’s leading consumer advocacy group, claiming that some funeral providers are unfairly profiting from Australians who purchase pre-paid plans.
“Australians don’t always get the full benefits when it comes to prepaid plans,” Choice’s investigative journalist Saimi Jeong said.
According to the Choice, InvoCare made $800,000 in 2019 with money “left over” from pre-paid funerals. Choice says ‘InvoCare doesn’t keep the money it receives from people who buy a pre-paid funeral. Instead, the cash is handed to an independent Friendly Society, that invests it in common assets such as shares and property.’
What you need to know
Most funeral directors allow people to ‘prepay’ their funeral, with the cost calculated on the choices that the person selects, such as the style of coffin and the type of service. These funerals are in ‘today’s dollars’ and can be paid as a lump sum or in instalments.
This is important if you have strong cultural reasons for wanting a certain type of funeral or certain features. If you want to pay for the funeral up front but don’t want to be faced with all the details yet, you can pay for the funeral and leave the details for your relatives to decide later.
Are prepaid funerals worth the risk?
No matter how attractive prepaid funerals may sound, there are risks with any prepaid products. The most important thing is to do your homework, shop around and read the fine print. For many of the family members of those who have prepaid their funeral, they often misunderstand the contracts, are unaware of them, or find themselves surprised that there may be additional fees to be paid.
Although these companies will always tell you about the pros of prepaid funeral plans, there are also lots of cons that you should be aware. But don’t just take our word for it!
The recent Royal Commission into Misconduct in the Banking, Superannuation, and Financial Services Industry (the Royal Commission) raised some serious findings relating to some prepaid finance products.
Choice, Australia’s leading consumer advocacy group, has claimed that some funeral providers are unfairly profiting from Australians who purchase pre-paid plans. “Australians don’t always get the full benefits when it comes to prepaid plans,” Choice’s investigative journalist Saimi Jeong said.
The Australian Securities and Investments Commission’s Moneysmart website also cautions that prepaid funerals can be inflexible and it may not be possible to get your money back once you’ve paid for your funeral, should you change your mind later.
What are the pros and cons of prepaid funerals?
Like most products, there are pros and cons with prepaid funerals. You choose the type of funeral you like and pay for it in full or make a deposit and pay instalments over a fixed period. Only some plans offer a refund if you cancel – always check this before committing.
- Costs are fixed in today’s prices even if your funeral is not for many years
- You can control funeral arrangements if you want to (such as casket, flowers etc)
- You can pay in instalments over time
- Can be a lot cheaper than a funeral bond or funeral insurance if you live for another 5-10 years
- Can be inflexible if you move interstate to live with family. Some pre-paid plans are transferable to different providers
- If you change your mind about a pre-paid funeral you may not be able to get your money back. Check the terms and conditions.
Are there any other alternatives?
By pre-planning your funeral wishes in advance, you can make reasonably priced funeral arrangements, without setting aside large sums of money or prepaying anything. Get detailed price lists from several funeral homes—online, over the phone or in person—and compare prices. You’ll see big price differences for essentially the same goods and services. Visit several independent funeral homes, and choose the one you like best.
Most importantly, be sure to tell your family about your choice. Appoint a funeral guardian and walk them through every detail. Give them copies of any contracts or written wishes right away. Do not put them in a locked safe. Do not simply tell your children, “Everything is taken care of.” Your family will have to make choices after you die; you cannot prepay the future away. You and your family will enjoy peace of mind, knowing that the important decisions have been made and thoroughly discussed.
What do we recommend?
We strongly recommend advance funeral planning, which allows comparison-shopping and makes the arrangements easier for your family. But if you decide to pay for your funeral in advance, be very cautious.
You should speak to and evaluate multiple funeral homes before signing any agreement for future delivery of funeral goods and services. eziFunerals can help you with the research. The final decision is yours, so choose wisely.
eziFunerals supports individuals and families cope with end of life decisions, death and funerals. We are an independent, Australian-owned and operated company, and are not a subsidiary of any other corporation. We are not part of any other funeral company.