Buying a prepaid funeral

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Consumer

If you are considering prepaying for a funeral, either for yourself or on behalf of someone else, know your rights under the Fair Trading (Prepaid Funerals Code of Practice) Regulations 2020 (the code). The code will start on 1 March 2021.

Terms used in the code may help clarify common terms used on this page. 

What is a prepaid funeral?

A prepaid funeral is a funeral planned, contracted and paid for in advance with a selected funeral organiser. A prepaid funeral contract will state all the details of the funeral service and all necessary costs.

How is a prepaid funeral different to funeral insurance or funeral bonds?

Funeral insurance is an insurance product under which you agree to pay a premium. This premium covers an agreed amount paid out at the time of death.

Funeral bonds are an investment product that can help you plan financially for a funeral. The amounts you pay will be invested up until the time of death when they will be paid out.

These are both different to a prepaid funeral. A prepaid funeral is guaranteed to cover the full amount of the contracted funeral.

What happens to the money when you purchase a prepaid funeral?

From 1 March 2021, a funeral organiser must forward all payments received under a prepaid funeral contract (excluding any fee, charge or GST) to an investment manager. They must do this within 16 days of receipt of the payment.

Investment managers can be:

  • life insurance companies;
  • friendly societies;
  • licensed trustee companies; or
  • the Public Trustee (Western Australia).

The funeral investment must be designated in the client’s name. Funds can only be released after the funeral arranged under the prepaid funeral contract has been carried out.

What happens if the funeral cannot go ahead as planned due to COVID-19 or another unexpected emergency? Is there any redress available for the family?

If this happens, it is important to consider the original terms and conditions.

For example, in a pandemic where restrictions may impact funerals, you would need to consider whether the contract has a force majeure clause. This may enable the provider to exempt some of their services.

Contact Consumer Protection or lodge a complaint if you can’t negotiate a suitable outcome.

What happens if the business closes down?

From 1 March 2021, a prepaid funeral contract must cover what happens to payments made if the funeral organiser closes down before the contract is performed.

If this happens, it is important to consider the original terms and conditions.

What if I die before I have finished paying off a prepaid funeral?

A prepaid funeral contract must cover what happens if a recipient dies before full payment of the contract has been made.

If this happens, it is important to consider the original terms and conditions.

Can the funeral organiser increase the price of the funeral?

No. The cost is fixed unless both parties to the contract agree to vary it, for example if an additional service is later required.

Where the recipient of the prepaid funeral has passed away, any change to what was included in the contract must be agreed to by the recipient's legal personal representative.

What if I cancel a prepaid funeral before I finish paying it off?

A prepaid funeral contract must cover what happens if you end the contract before full payment has been made.

If I bought a prepaid funeral before 1 March 2021, is it covered by the code?

No, the code will only apply contracts entered into from 1 March 2021.

Terms used in the code

Funeral Organiser - the funeral broker or funeral director.

Client - the person who enters into a prepaid funeral contract with a funeral organiser. The client may or may not be the recipient.

Cooling-off period - the period of time after you have signed the contract in which you can cancel the contract without penalty. The cooling-off period for a prepaid funeral is 30 days from the date you sign the contract.

Funeral service – includes:

  • organising death and funeral notices;
  • mortuary facilities or services;
  • providing a coffin, casket, urn or other container to be used for the remains;
  • providing flowers;
  • transporting the remains;
  • transporting the people attending the funeral;
  • carrying out a service for the funeral; and
  • carrying out an interment or a cremation.

Prepaid funeral contract - a contract between a client and a funeral organiser entered into during the life of a recipient under which the client agrees to make a prepayment; and the funeral organiser agrees to arrange or provide funeral services for the recipient.

Prepayment - the amount paid to the funeral organiser under a prepaid funeral contract before the death of the recipient.

Recipient – the deceased person for whom funeral services are provided under the contract.

Related documents

Prepaid funerals checklist for consumers

Prepaid funerals frequently asked questions for the funeral industry

New rules to keep funds for a future funeral safe (Media Statement – 31 August 2020)

Fair Trading (Prepaid Funerals Code of Practice) Regulations 2020

Do you sell prepaid funerals? 

Advice for businesses selling prepaid funerals is available on the Prepaid funerals page. 

Contact us directly if you have any questions.

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