Prepaid funerals, funeral bonds and funeral insurance: how they differ

Many people want to make sure the cost of their funeral won't fall on their family. In Australia there are a few common ways to do that, and they work very differently. This guide explains each one in plain terms, using information from Moneysmart, the government's money guidance website, and Services Australia. Remember Well• doesn't sell any of these products or take commissions.

Prepaid funerals

A prepaid funeral plan lets you choose and pay for your funeral in advance with a funeral director. Moneysmart notes that prepaid plans use today's prices, so the cost doesn't rise over time, and that they can cost less than funeral insurance or funeral bonds. You can usually pay in full, or pay a deposit and then make regular payments.

Before you sign, ask exactly what is included and what isn't, what happens if you move or the funeral business changes hands, and whether you can cancel. Keep the contract somewhere your family will find it.

Funeral bonds

A funeral bond is an investment that helps you save for your funeral. You make payments over time, your money is invested and grows in value, and it can only be used for your funeral. It can't be taken out earlier, and you usually have to pay a deposit.

You can buy a funeral bond from a funeral director, a friendly society or a life insurer. Moneysmart notes they aren't widely advertised, so you need to ask for one specifically.

Funeral insurance

Funeral insurance is an insurance policy. Instead of putting money aside, you pay regular premiums to an insurer to help meet the cost later. Premiums usually rise over time, so it's worth asking how much you could pay in total over the years, and comparing that with the amount the policy pays out. If you stop paying, the cover can end.

Saving in a bank account

Moneysmart describes saving as the simplest way to pay for your funeral. If you do this, tell your family which account it is and make sure they'll be able to use it, since some accounts are frozen until the estate is sorted out.

How Centrelink treats them

Services Australia says a funeral bond won't count as an assessable asset if you've assigned it to a funeral director, if it's for fully prepaid funeral services, or if the amount invested is under the Funeral Bond Allowable Limit. As at 1 July 2026 that limit is $16,250, and it is reviewed each year. Check the Services Australia page for the current rules before you decide.

Whichever you choose, write it down

A prepaid funeral or a bond only helps if your family knows about it. Write down which product you have, who it's with, and where the paperwork is, alongside the kind of farewell you want. An end of life planner keeps all of this in one place, and storing your documents explains what else to keep together.

Sources

• Moneysmart: Paying for your funeral (checked November 2026)
• Services Australia: Funeral bonds and prepaid funerals (checked November 2026)

This guide is general information only, not legal or financial advice.