What are Funeral Bonds?

June 17, 2021

Here at F.W Barnes and Son’s, we have considerable experience in helping families plan funeral services in Ballarat. When a family is grieving, it is often difficult for them to decide on a funeral’s specifics, especially if their loved one left no instructions about what they wanted or if money is tight.

This is where pre-planning and pre-paying for a funeral can help. Of the many pre-planning funeral options in Ballarat, funeral bonds are something that many people consider. But what are they, and how are they different to pre-paying?

What are Funeral Bonds?

Funeral bonds are managed investment bonds that help you save for your funeral. They are not the same as pre-paying the total cost of your funeral. Instead, they accrue money over time, and the money in the bond when you die is the money that your family can use to pay for any funeral costs.

There are two ways to pay into funeral bonds, monthly or with a lump sum. If you choose the monthly option, you pay a minimum instalment each month which is invested for you along with any other funds you have already paid in. With a lump sum funeral bond, you have to contribute a minimum lump sum amount, which you can then top up at any time.

How much does it cost?

The cost of a funeral bond depends on how much you want to save and how long you want to save for. If you go for a monthly plan, it is recommended that you spend roughly $50 per month. The minimum is generally $42 per month, and you are usually required to put down a deposit of $100.

If you go for the lump sum option, the minimum amount recommended is $500 with minimum top-ups of $42. Bear in mind the type of funeral you would like when you weigh up the amount you want to accrue. Funerals can cost anywhere from $4000 to $20,000, ranging from a simple cremation to a more lavish event.

Advantages of Funeral Bonds

Clever use of interest

Your bonds will accrue a certain amount of interest over time, but crucially this interest is not considered income. This helps cover the shortfall of rising funeral costs between when the bond is taken out and when the funeral occurs. Moreover, Centrelink exempts funeral bonds from the assets and income test up to a maximum of $12,500.


The companies that manage funds are regulated by Australian Law, which ensures that the investments made on your behalf are not risky. This gives you peace of mind knowing that your money is being invested safely.  For more information regarding the legalities in Australia please visit servicesaustralia.gov.au/individuals/topics/funeral-bonds-and-prepaid-funerals/28486


Funeral bonds encourage saving as you cannot dip into the fund as they can only be accessed after the death of the named person on the bond. Another advantage is that your savings will grow more over time than they would if they were just sitting in a savings account. The way your funds are managed ensures a safe method of investment and a good rate of return.

If you do not want to prepay for your funeral but still want control over certain elements, such as choosing your funeral director (you can specify which company you want on the policy), then funeral bonds could be the perfect choice for you. You will also be safe in the knowledge that your family will have funds to pay for your funeral. For more information click here.