Some people make pre-payments towards the cost of their funeral. There are different types of pre-paid funeral arrangements and NSW Fair Trading regulates the first two listed below.

Contributory funds

Small regular payments go towards part or all of a funeral service with a particular funeral director or provide money to go towards the cost of the service. Conditions may vary between funds and will be set out in detail in the fund's constitution.

Pre-paid funeral funds

This involves selecting a funeral director, making decisions about the type of funeral that you would like and then paying for that funeral at today’s prices, usually in one lump sum or several instalments. The money is then forwarded to a funeral fund registered with NSW Fair Trading and is considered an exempt asset for the purpose of calculating the pension. 

NSW Fair Trading may be contacted on 1800 502 042 for information as to whether a fund is registered.

Funeral insurance

Funeral insurance is usually purchased directly from an insurer. It involves small regular contributions for a specified cash payment on death. However, like most forms of insurance, the money paid over the years cannot be refunded if you decide to cancel the insurance. Age and health restrictions may apply when taking out the policy. The premiums may increase over the years to keep up with inflation or other factors.

Funeral bonds

A form of investment that allows you to set aside your own money for a funeral, which is held as a bond and paid when the funeral is required. It cannot be withdrawn early.

A funeral bond can be in your own name, in joint names (with the benefit paid in full upon the death of the first joint owner) or can be assigned to a funeral director.

Certain funeral bonds are exempt from the assets test. Contact Centrelink on 13 23 00 or go to www.centrelink.gov.au for details.

Pre-paid products

You pay in advance for the right to use a grave plot, a wall niche or a place in a memorial garden. Typically purchased directly from a cemetery or crematorium and may suit people who do not wish to pay for the full delivery of their funeral in advance but want to secure the place they will be interred.

Pre-paid funerals and pre-purchased cemetery plots are exempt from the assets test for Centrelink payments. Contact Centrelink for more details.

Some funeral directors limit pre-paid schemes to aspects of the funeral they have control over such as their personal services and the coffin, and may not include the burial or cremation. Make sure you understand your rights and obligations and whether it covers some or all of your funeral costs before you sign for a pre-paid funeral arrangement.

If you have any concerns about the conditions of the arrangement, seek independent legal or financial advice.

Fair Trading can tell you if a funeral fund is registered before you commit to it – call 1800 502 042.

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The Funeral Funds Act 1979  (the Act) requires:

• all money paid to a fund to be invested in secure investments. 
• all registered funds to lodge annual reports with NSW Fair Trading. However, you should seek your own independent financial advice as to whether the fund is financially sound and viable. 
• the funeral fund provider to be separate from the funeral director who is to supply the service. This ensures your money is secure if the funeral director goes out of business.

The Funeral Funds Regulation 2006 requires:

• a cooling-off period of 30 days for pre-paid contracts.
• a $50 penalty fee if the pre-paid contract is cancelled during the cooling-off period.
• the funeral director must provide you with information on each component to be supplied under the contract and the costs of those components before you enter into a pre-paid contract, including information about services not covered by the contract and other terms and conditions of the contract.
• a time limit of 7 days from the time of signing a pre-paid contract for the transfer of monies from funeral directors to a registered funeral fund.
• particulars must be included in the annual report given to contributors to a funeral contribution fund which will reduce uncertainty about the nature of the entitlement to be paid. To find out what particulars must be included in the annual report, please refer to the Funeral Funds Regulation 2006  (Part 2 Section 8).   

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Under the Act all pre-paid and contributory funeral funds in NSW should be registered with NSW Fair Trading.

To obtain information on how to register a funeral fund or to find out whether a fund is registered, contact the Registry of Co-operatives & Associations on 1800 502 042 or download the application for registration of a funeral fund form.

Application for registration of a funeral fund form in PDF format (size: 213kb)

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The following funeral extras are not covered under the Funeral Funds Act 1979.

• Funeral insurance. An insurance product offered to cover the cost of a funeral. This product does not involve the delivery of a funeral service and is not covered by the Act.
• Funeral bonds. A form of investment which allows a consumer to set aside money for a funeral which is held as a bond and paid when the funeral is required.
• Pre-paid products. Such as grave plots, niches or memorial gardens.
• Membership benefit schemes. A number of organisations offer a payment upon the death of a member to assist with funeral costs.

If you have a problem regarding any of the above products, call Fair Trading on 13 32 20 and we may be able to resolve the issue if there has been a breach of the Fair Trading Act 1987 or by referring you to another Government department for assistance.

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If you have a problem, try and resolve it directly with the funeral director or fund.

If you are unsuccessful, contact Fair Trading on 13 32 20 or lodge a complaint online.

Remember to keep all your paperwork and notes of everyone you speak to.

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