Exempt Funeral Investments (Funeral Bonds) 108-04080030

This document outlines the assessment of funeral investments, commonly known as funeral bonds, and provides information about the purpose of funeral bonds.

Individually or jointly owned bonds

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 means test exempt if:

they do not have any pre-paid funeral expenses, and
the purchase amount of the bonds does not exceed the Indexed Funeral Bond Allowable Limit (IFBAL), currently $15,500 as at 1 July 2024 (The 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 (instead of its value including interest), even if it is jointly owned, is compared to the IFBAL to see if it is exempt

The Resources page contains further information regarding exempt funeral investments (funeral bonds), current and historical IFBAL amounts.

Cemetery/burial plots

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.

Pre-paid funeral expenses

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.

Funeral insurance

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