Budget changes to funeral bonds bring peace of mind

The Budget changes to funeral bonds have been welcomed, as the asset test exemption is to be increased to $10,000.

Lifeplan Funds Management Group general manager, strategic development, Matt Walsh said the increase in the tax-exempt threshold would also be indexed for the first time.

“The changes, which come into effect on January 1, 2008, allows a person or couple to have a second policy exempt from the means test,” he said.

“The increase to the exemption is timely due to the increased popularity of funeral bonds.”

Lifeplan, which is the largest provider of pre-paid funeral investments, has seen funds under management in these products tip $4,300 million for the first time. The friendly society has a 30 per cent share of the funeral bond market.

Walsh said with funerals costing between $8,000 and $10,000, the increased threshold would bring peace of mind to investors in these products, as it would now cover most of the costs of a funeral.

“With the cost of dying continuing to rise, an ever increasing number of people are looking to make a provision, and the simplest and most tax effective way is through a funeral bond,” he said.

“For many people, one of the main benefits of this type of investment is to ensure their own loved ones are not left with the financial impost of funeral costs following their death.”

Walsh said from January 1, next year, people could invest up to $10,000 in one of his company’s bonds, which provides funds towards a funeral paid as either a large lump sum or through regular contributions in a tax effective capital guaranteed investment.

Annual bonus payments in the products are exempt from personal income tax, and on death the benefit is paid into the bond holder’s estate.