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Contributory and pre-paid funerals 

Pre-paid funeral arrangements 

Some people make pre-payments towards the cost of their funeral. There are different types of pre-paid funeral arrangements.

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’s Registry Services may be contacted on 1800 502 042 for information as to whether a fund is registered.

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Your protection 

The following rules are in place to protect consumers:

  • A funeral fund must invest all the money paid to it in secure investments.
  • All registered funeral funds must 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 must be separate from the funeral director who is to supply the service.  This ensures that your money is secure if the funeral director goes out of business.
  • A funeral fund provider must provide a client with a 30 day cooling-off period when they enter a pre-paid funeral contract.  However, the client will be subject to a $50 penalty fee if they cancel the pre-paid contract during the cooling-off period.
  • A funeral director must provide a client with information on each component to be supplied under the contract and the costs of those components before they enter into a pre-paid contract. This information should also detail the services not covered by the contract and state clearly the terms and conditions of the contract.
  • A funeral director must transfer money received from a client who has entered a pre-paid contract to a registered funeral fund within 7 days.
  • A funeral fund provider must provide a client with annual reports that include particulars which will reduce uncertainty about the nature of 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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Registration 

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 NSW Fair Trading’s Registry Services 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: 85kb) 

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Other funeral products 

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 insurance is regulated under the Commonwealth Life Insurance Act 1995. Contact the Australian Securities and Investments Commission (ASIC) Infoline on 1300 300 630 for further advice about funeral insurance.

Funeral bonds

A funeral bond is 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.

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

Membership benefit schemes

A number of organisations offer a payment upon the death of a member to assist with funeral costs.

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If things go wrong 

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. We may be able to resolve the issue or refer you to another Government department for assistance.

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

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