Death is neither a pleasant nor an easy aspect of life to face, but it is unfortunately an inevitable and often sudden occurrence. Many people choose to avoid the issue, making no preparations for their funeral although it is impossible to predict when their time will come. You may feel that making a Last Will and Testament (a document which details how your assets should be divided after your death), and perhaps leaving some money aside as a contribution to funeral costs, is sufficient preparation for your death. However, you may have a particular funeral in mind, or wish to protect your loved ones from unnecessary stress and organisation. If so, you may wish to purchase funeral insurance.
Funeral Insurance differs from other types of insurance due to its inevitable nature. Most insurance policies offer protection in case something happens, and typically offer compensation when it does; in the case of funeral insurance it is certain that people will die, and that funeral expenses will have to be paid. For this reason, funeral insurance usually takes the form of a financial package, or 'funeral plan', rather than a typical insurance.
A funeral plan is an agreement between you and a financial organisation, which creates a plan for your funeral arrangements for which you pay in advance. The provider of the funeral plan guarantees that your funeral will be conducted as outlined in your funeral plan, and uses the advance payment that you make to cover the costs. The money that you pay will typically be paid into a trust fund; the money earns interest to compensate the provider for the increase in the cost of funerals before your death.
A funeral plan enables you to plan as many or as few aspects of your funeral as you wish, and be comforted knowing that your family will not be burdened financially as a result of your death. If the average cost of funerals in Australia continues to rise faster than inflation you could also save money. However, there are problems with funeral plans, such as changing your mind about the arrangements, moving abroad, or your funeral provider going out of business before you die.
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