Funeral bonds and investments 108-04080030

Funeral bonds are individually or jointly owned and meet all the following:

• cannot be released before maturity
• matures on the death of the customer or their partner
• amount paid on maturity must be applied to funeral expenses on whose death it matures

A customer's interest in up to 2 funeral bonds may be exempt from the assets test if:

• they do not have any pre-paid funeral expenses, and
• the purchase amount of the bonds and any additional funds contributed by the customer (for existing bonds) does not exceed the Indexed Funeral Bond Allowable Limit (IFBAL), which was $15,500 as of 1 July 2024 (Department of Social Services review this limit on 1 July each year):
• Each member of a couple may invest up to the allowable limit in a funeral investment. For example, if each member of a couple has an individual investment of $15,500 then $31,000 is an exempt asset for the couple
• If a couple invest in a joint funeral bond, the amount invested must not exceed $15,500 for the bond to be an exempt funeral investment

The original purchase cost and any additional funds contributed by the customer (for existing bonds) but not including investment earnings or bonuses, is compared to the IFBAL to see if it is exempt, even if it is jointly owned.

These can also be exempt from the assets test. A pre-paid funeral is an advance payment by a customer for funeral services agreed by contract, with no limit to the amount a customer may invest. If the customer has a pre-paid funeral and a funeral bond, only the pre-paid funeral is exempt.

Some pre-paid funerals are paid for with a funeral bond assigned to a funeral director. If it meets pre-paid funeral conditions, that is, a contract for future services, it is treated as a pre-paid funeral, not a funeral bond.

These are exempt from the assets test and include ownership of a specific place such as a plot in a cemetery, an interment niche or a mausoleum, or having the right to be buried in a certain place, even if the plot is not specified.

This is a type of insurance policy that covers funeral expenses and is payable upon death. It does not generally have a surrender value.