InsuranceLine: Planning early prevents stress

Your funeral is the last big expense you?ll incur on this earth. While paying for it after the event won?t bother you, for obvious reasons, it could bother the family member or friend left behind who has to foot the bill.

If you are 60 or over, may well work for you and this year, for the first time, CANSTAR has researched and rated funeral insurance policies available in Australia. In our inaugural report we have conducted research into 14 eligible policies and are pleased to congratulate InsuranceLine for its award-winning  Funeral Insurance Advantage product.

We caught up with InsuranceLine for a Q&A on the benefits of funeral insurance.

Q: What are the advantages of funeral insurance over, say, superannuation or life insurance in terms of paying for a funeral?

A: Funeral insurance serves a group of Australians who have little or limited financial ability to deal with their own and their loved one?s final stages of life with dignity.  Customers regard this insurance as a way for them to provide for these circumstances and not leave a financial liability for others.  In many cases, a funeral insurance policy is the only option available for people to meet this need.   Even for those who have adequate assets, savings, superannuation and reserves to pay funeral costs, frequently the money can?t be accessed as quickly as a funeral insurance benefit can be paid.

With claims paid within 24 hours of receiving claim requirements, InsuranceLine Funeral Insurance ensures beneficiaries have quick access to cash to send their loved ones off in the style they desire and with the dignity they deserve.

Q: In terms of total funeral cost, are there any particular expenses that, in your experience, can be commonly forgotten by people when they are calculating the level of cover they need?

A: Most people only find out about funeral costs when they need to arrange the funeral of a family member or friend. Funerals can cost from $4,000 for a basic cremation to around $14,000 for a more elaborate casket, burial and flowers.

The typical items that need to be paid for, and which people often underestimate, include:

  • Funeral director fees
  • Transport
  • Coffin
  • Death certificate
  • Permits (for burial / cremation)
  • Burial / cremation
  • Cemetery plot
  • Interment / scattering of ashes
  • Headstone
  • Other expenses, such as a celebrant or clergy, flowers, newspaper notices and the wake

Q: Do you have any research findings on what prompts people to take out funeral insurance? Is there a particular age/life experience that prompts the decision?

A: Susan Bell Research was commissioned by ASIC in 2012 to investigate how people plan to fund funeral expenses.   The bulk of the report (20 of 45 pages) describes the ?journey? people took from thinking about their funeral, to buying a product to pay for it.  This journey had the same 4 stages, regardless of the type of product eventually purchased.  Whether the product purchased was a prepaid funeral, a bond or an insurance policy, the journey was initiated for broadly the same reasons, and led to the same emotional conclusion.

Stage Characterised by Researcher?s Conclusion
1 A growing commitment to the idea
  • Insurance advertising significant in building the whole category of funeral benefit products
  • A belief one should prepare so as not to be a burden on family
  • A belief (largely due to funeral insurance advertising) that funeral expenses are ?escalating?
2 Response to a trigger to act
  • Retirement
  • Personal ill health
  • Death of someone close
  • Pressure from a relative
3 Product selection and purchase
  • Customers don?t research or make comparisons between the 3 types of funeral benefits
  • Prepaid versus bond largely the decision of the funeral director
  • Centrelink tends to promote bonds because of potential retirement income benefits
  • Insurance customers from lower socio-economic backgrounds and people unwilling to confront/arrange the specifics of their own funeral (choose the casket, flowers, music, etc)
  • Insurance a familiar product (insure the car – why not a funeral?); easy to understand and buy; low awareness of alternatives; appears more affordable (albeit long-term customers knew this to be short term; otherwise, little appreciation for the potential & quantum of increasing costs over time); fast payout; incentives such as will kits, gifts, etc
4 Emotional closure Personal emotional benefit after purchasing a product the same for all products:
  • Sense of having acted responsibly
  • Feelings of pride
  • Relief and peace of mind
  • Being organised
  • Sense of being in control

Q: It?s difficult for family members to broach the topic of estate planning with parents or grandparents. Is it something, though, that should be openly discussed? Do you have any tips on how family can raise the topic of estate planning?   

A: There are many ways to broach “the talk” with aging parents about estate planning and the sooner you start the better, for all concerned.

Putting a plan together when your parents are still in good health will prevent any stress or confusion that could result should their health falter later in life.

Don’t shun the talk.  Discussing personal finances is often considered taboo, but many barriers can be knocked down if you approach the conversation openly, lay out your goals, and check them off.

Don’t wait for a health crisis — or any other crisis — to talk to your parents about their estate plans. If you feel awkward using an ice-breaking strategy then just be upfront about acknowledging how uncomfortable the topic makes you feel.  That in itself is an ice breaker.

Don’t rush things.  Ensure your parents feel loved and in control of the situation.  Don’t forget the discussion is about them and how they want you to fit in.  Listen to their ideas to get a strong understanding of what they want.  If you have suggestions then offer them, but don’t expect that they’ll immediately accept them, if at all.  It’s about people skills and open communication.  If you know that will be a hurdle from the start, then perhaps a visit to a third party such as a lawyer with estate planning experience or a financial planner can be a good way to start.

What to talk about.  Assets, wills, and how your parents want to share their legacy.  Be prepared with specific questions about all those topics.  Beyond that, you’ll need to talk to your parents about plans about their income, retirement investment plans, and health care.  Some professionals suggest commonly cited questions including: should your parents have a living will?  Does the Power of Attorney cover off what your parents want addressed?  Does your parents’ will and estate plan clearly lay out the transfer process to beneficiaries or deal with tax issues?

Discuss where the documents will be kept.  After figuring out exactly what your parents want in their estate plan there must be clear guidance on where those plans will be kept.  Family members should know where to easily find phone numbers and contact names, details, and documents including wills, investments, and personal information such as birth certificates.

CANSTAR congratulates InsuranceLine on its win. Readers can download the Funeral Insurance Award report here.

 

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