Understanding What Funeral Bonds Do in Australia
The conventional funeral costs are steadily increasing, with expenses often surpassing $10,000. To ensure financial preparedness for the inevitable, many turn to funeral bonds or opt for a prepaid funeral plan, proactively managing the financial implications of end-of-life arrangements. Even with expected deaths, the unforeseen financial strain of funerals catches many families off guard. Sadly, a significant portion of Australian seniors, lacking savings or adequate estate funds, face financial hardship, as highlighted in a report by Seniors. However, there are practical ways to plan ahead for future funerals, even if they are months, years, or decades away. Allocating funds for your funeral not only provides peace of mind but also lessens the financial burden on your loved ones when they eventually arrange your farewell. This article aims to elucidate the advantages of preparing for your funeral while still alive, shedding light on the distinctions between funeral bonds, funeral insurance, and prepaid funeral plans.
- Demystifying Funeral Bonds
- Mechanism of Funeral Bonds
- Pros and Cons of Funeral Bonds
- Advantages of Funeral Bonds
- Disadvantages of Funeral Bonds
- Funeral Bonds vs Funeral Insurance
- Concluding Thoughts
Funeral bonds act as managed investment products designed to accumulate funds for funeral expenses. The invested money is securely held in an independently managed funeral fund, accessible only after the accountholder's demise.
Funds held in funeral bonds are invested in the accountholder's name, earmarked for future funeral expenses. Withdrawal of funeral bond funds is only permitted upon the accountholder's demise, offering a layer of security. Any remaining funds become part of the deceased person's estate.
Advantages and disadvantages of funeral bonds are discussed, covering topics such as:
The article delves into the distinction between funeral bonds and funeral insurance, providing insights into the secure holding of funds in the former until required for the funeral. Funeral insurance necessitates ongoing payments, often for the policyholder's entire life.
Funeral bonds and prepaid funerals provide secure means of planning ahead and alleviating future financial stress for families managing funeral arrangements. The funds, held in the accountholder's name until needed, distinguish these options from funeral insurance, which may raise concerns about its efficacy.