What? When? How? Here is Everything You Need to Know About Funeral Bond
Nobody likes to talk about it but the fact is that death is inevitable. As you approach the end of life, it is required that you physically, mentally and financially prepare yourself for the last journey. With growing awareness, many retirees and residents of old-age care homes are inquiring about funeral bonds. It enables you to pre-plan your future expenses. A leading insurance company Adelaide can help you get more details about funeral bonds.
What is a funeral bond?
Many people choose not to be a liability on their relatives when they are no more. So, they prefer to put aside funds for their funeral expenses so that nobody has to pay for it. This is known as a funeral bond. It is similar to a trust account which accrues bonuses and gets paid at the time of death. This fund can be only used for funeral expenses. If the final cost is more or less than the investment, the appointed nominee will receive the total balance of your policy on behalf of your estate.
- As per your budget and convenience, you can start with a small investment of $100 as well. Later you can make regular payments as the circumstances allow. When your target amount is reached, you can choose to cease payments. Funeral bond guarantees that you do not pay even a dollar more than the cost of your funeral.
- It becomes difficult for the families to make certain difficult decisions at an emotional time. By purchasing a funeral bond, you can save your family from that distress. Funeral bond gives you permission to nominate a funeral director. You can directly pay him. Proper documentation will be done at the time of payment and your family will not have to worry about any paperwork.
- The biggest benefit is that your family will be spared from the financial burden of funeral expenses. It will give you immense satisfaction and peace of mind that you have made all the necessary arrangements.
- Your exact wishes will be conveyed properly to your family.
- Funeral bonds are exempt from the Centrelink/DVA income and asset test. This will help you maximise your pension entitlement.
- You can pay a maximum of $13,000. It will not be subject to deemed earning rules.
If you smartly choose a funeral bond insurance company, it will conservatively manage the bond by investing it in low-risk securities. The return will be annually added to your policy.
The accumulated fund and bonuses will be paid to the nominee after your demise. After receiving independent verification, the funeral benefit gets paid within 1 working day.
When should you purchase a funeral bond?
Sometimes certain life events like entering into an aged care home or retirement trigger a decision to opt for a funeral bond. It helps you arrange your funeral in advance. Many elders do not want their family to be burdened with funeral costs after their departure. In addition to that, it increases pension amount and improves subsidy if you are entering into an aged care home.
Can you use Power of Attorney to invest in a funeral bond?
Nowadays more and more elderlies are using power of attorney to commence a funeral bond. Power of Attorney is a part of protocols when it comes to financial products. The insurance company from which you purchase a funeral bond will have a copy of the Power of Attorney and it will ensure that your instructions and wishes are followed after your death. Confusion may arise if more than one nominee is appointed in the Power of Attorney. They can be given the power to act individually or jointly in a prescribed succession. For example, one may appoint a spouse to act independently but in case the partner is unavailable or unable to act (deceased or lacking mental capacity), then their children might act jointly. The insurance company also verifies the reason why the appointed nominee is unavailable or unable to act.
The government has declared funeral bond funds as financial products from 1st January 2021 under the Corporations Act 2001. From then onwards, funeral bond funds will be subject to the same provisions as other financial services including deposit accounts, general and life insurance, and superannuation funds.
You have lived your whole life planning meticulously about the future. Then why not pre-fund your funeral bond? In the time of distress, it will provide great relief to the family in grief.