Losing a loved one is an incredibly challenging and emotional experience. During such a difficult time, the last thing you want is for your loved ones to be worried about the financial burden of arranging a funeral. If you are researching your options, you may have come across Funeral Insurance packages as well as options for Funeral Benefits.
What’s the difference and what’s the best choice for your family?
Funeral Insurance
Funeral insurance is an insurance policy whereby you choose the coverage amount you want for your funeral insurance policy and then pay a regular premium to keep your account active. This is the amount of money that will be paid out to your loved ones when you pass away.
One of the key risks with funeral insurance is that customers generally need to continue to pay expensive premiums until they pass away. If someone with a funeral insurance policy finds themselves in financial hardship and can no longer pay the premiums, they will lose everything they have invested. Premiums generally increase as policyholders age, which can make them more expensive over time, leaving many pensioners in an extremely unfortunate position.
The other major concern with funeral insurance is that customers typically don’t get back the premiums they pay. The 2018 Hayne royal commission into banking revealed that funeral insurers paid out only about one-third of the premiums collected.
Before signing up for funeral insurance, we recommend researching your provider and carefully looking into contracts to ensure that you are aware of the dangers.
Funeral Benefits
An alternative option is accessing Funeral Benefits through an APS membership. It works in a similar way in that, you will pay regular membership fees, and the amount that will be paid out to your beneficiary is dependent on your age when you first become a member. But there are also key differences for you to consider:
- Your membership fee never increases
- You pay your membership fee to age 70 and then your cover is provided free of charge
- As a profit-for-member organisation, profits are distributed back to members through additional increases to your funeral benefit
It’s as simple as that, no premium increases, mysterious terms and conditions or exit fees!
What’s the best choice for your family?
There are plenty of dangers surrounding the Funeral Insurance industry in Australia, which is why we encourage you to do thorough research before creating a policy. Funeral Benefits are the safest way to ensure that you are protecting your family and not losing money in the process. Over 30,000 APS members have a funeral benefit and peace of mind knowing that their money is in safe hands and that their loved ones will be taken care of no matter what the future holds.
Learn more about APS Funeral Benefits.