Funeral Bonds and What They Mean For You
What is a Funeral Bond?
A funeral bond is an financial investment which gains interest (potentially) and can only be used to pay for elements of a funeral. It is different from a pre-paid funeral in that no aspects of the funeral have been selected and you are not locking in prices. It is different from a pre-arranged funeral as well, as it does require a monetary investment and again, you are not selecting any aspects of the service.
The advantage of a bond is that it provides you with flexibility and with options. This means that if you move to a different state, you are able to swap easier to a local funeral provider.
Essentially, you are covering the financial aspects of a funeral service only, though there is no guarantee that all of the costs will be covered, like with a pre-paid service.
Funeral Bonds, Centrelink and You
Perhaps the biggest advantage of a funeral bond is that they can be exempt from Centrelink means testing. What this means is that people looking to reduce their assessable assets for the Services Australia (Centrelink) mean test can potentially use a Funeral Bond. Often, this is recommended by financial advisers, though we recommend that you check if this exemption will apply to you.
There is a limit on how much can be invested for a Funeral Bond. This amount fluctuates (typically every July) and for the year of July 2019 - June 2020 period, the maximum amount is $13,250. It is possible to invest jointly, as a couple for instance, though the cap remains the same on the bond.
As with a pre-paid funeral, if you stop making payments at any point, the money already invested remains. What this means is that you won't lose access to your funds, like with funeral insurance. This is part of the flexibility and a major advantage of funeral bonds and pre-paid funerals.
How Safe are the Bonds?
Much like all investments there is a degree of risk involved. For an up to date appraisal of risk, it is best to speak with us and we can advise you. The return may fluctuate.
For the bond itself, it is managed by Foresters Financial. They are an established, Australian financial company. This means that H. Parsons are not involved in holding, managing or overseeing any of the funds. This responsibility rests with the experts over at Foresters Financial. It also means that should anything happen with H. Parsons Funerals, your bond and investment remains safe.
Who Can Take Out a Bond?
Bonds are largely personal. It is possible to invest in a bond with another person, typically a spouse or partner. When investing on the behalf of another person there may be technicalities to overcome. You can speak to one of our staff to help you and to work through this process however.
Most often, people will decide to take out their own Funeral Bonds and prepare for their own passing. This in turn prepares their family and friends, as it can largely remove the financial burden of arranging a funeral.
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