What is the difference between prepaid and prearranged funerals?

A prearranged funeral is where funeral and service details are decided now, in discussion with a funeral director, and used at a later date.  A prepaid funeral is a financial arrangement whereby the agreed services are paid for now and provided at a later date.  While these are two separate actions, they can usefully be considered together.  

Why do people prepay their funeral?

People have two major reasons for prepaying funerals:

  1. To remove a financial burden from your loved ones:
    Most of us plan for nearly every financial eventuality we may face throughout our lives - buying a house and car, having a family, retirement and so on.  Our death is another event but one which is sad and stressful for our family to deal with.  With the funeral preplanned the family can concentrate on supporting one another and making the service personal and meaningful.
  2. To receive financial benefit when considering long term residential care:
    If the need arises for long term residential care in a rest home or hospital a person wishing to receive Government funding (the Residential Care Subsidy) is required to have a financial means assessment.  The value of any prepaid funeral of the person, or their spouse, up to a maximum value of $10,000 is exempted from the means assessment.

Which type of plan is best?

The only way to ensure you get the plan that suits you is to shop around.  When you do evaluate your choices however, check they are being provided by a reputable organisation and make sure you understand the rules.

How do I decide the value required in my funeral plan?

This depends on what type of funeral you want.  Assembling your thoughts is made easier by talking with a FDANZ Funeral Director.  They will help you with decisions on all of the components of the funeral.

Can I pay too much?

With some plans you can end up paying more in instalments or premiums than the value of the funeral. Check to ensure any surplus funds are returned to the estate when the value exceeds the funeral expenses.