Paying for your funeral in advance

A handful of insurers offer life insurance specially packaged to cover funeral costs. They are usually linked to a whole-of-life investment-type life insurance policy and are designed to pay out enough to cover the insurer’s estimate of future funeral costs.

Be warned: there is no guarantee that this estimate will provide enough to pay for your funeral, nor that the underlying investment will perform sufficiently well to pay out an adequate amount – especially if you were to die in the first few years after taking out the policy. Including an estimate of your funeral costs in the amount you are insured for with your term insurance is a cheaper and more flexible option.
Funeral insurance is different from pre-paid funeral plans, where you pay in advance directly to a funeral company.