Common questions

Forester’s main responsibilities are to ensure that your payment is properly invested in accordance with the Funeral Benefit Fund Rules and appropriate State and Federal legislation and that your funds are not released or accessed by any third party until the funeral service is provided.

Funds held in the Foresters Funeral Fund may only be invested in a manner as specified in the Benefit Fund Rules and the Life Insurance Act 1995.

Foresters is also regulated by the Australian Prudential Regulation Authority (‘APRA’) to whom it must report on a quarterly basis. Prudential Standards issued by APRA prescribe that money held in the benefit funds of a Friendly Society may only be used for the benefit of its members. If the Society were to cease to trade for any reason, the investments in the Funeral Fund could not be used to pay outstanding debts, but would continue to be held for the benefit of you, the Fund member.

It is important to understand that almost all investments have some level of risk and if you choose either the Sustainable or Growth options then there is a risk of a negative return due to volatility in financial markets.

Based on the timing of the withdrawal of your investment or when your Bond matures, you may not receive all of the funds you have contributed as a result of this risk especially in the shorter term.

With the exception of the Capital Guaranteed option, the preservation of your capital investment is not guaranteed.

Please seek independent financial advice to make sure that you are selecting the right investment option to suit your financial needs.

The Capital Guaranteed investment option declares an annual bonus each year as of June 30.

The bonus is based on the investment earnings of the Fund, less income tax calculated at the corporate rate of 30%, management fees, fees and any other required transfers to statutory reserves.

The Appointed Actuary makes a recommendation as to the annual bonus, which is subject to approval by the board of directors of Foresters.

Once allocated, bonuses form part of your Capital Guaranteed investment and contributes to increased future bonuses.

No.

Under current legislation your investment in the Fund may be exempt for the purposes of the assets test, income test and deeming provisions of both social security and veterans’ entitlements legislation.

To satisfy the requirements of these bodies your investment must be kept solely to contribute towards your funeral expenses and must be a reasonable estimate of the cost of the expenses.

Please note that under these provisions you will now be able to include the value of up to two funeral bonds provided the following criteria are met;

You do not also have a prepaid funeral contract
The amount invested in the Bond does not exceed the funeral bond allowable limit which at 1 July 2021 was $14,000. This amount is indexed every 1 July.
If you assign ownership of your Bond to a funeral director in consideration of the purchase of a prepaid funeral, then there is no limit on the amount you may invest.

The cost of a funeral plot in a cemetery need not be included in the funeral cost that applies for pension exemption purposes.

Yes, you can nominate a preferred funeral director who you would like to perform the funeral service.

In the event that you move overseas, your funeral bond investment will still remain in the fund in your name and at time of death will be paid to your estate to contribute towards your funeral expenses.

If you change your mind for any reason, simply provide written notice of your intention to cancel your application and return your Certificate of Membership of Foresters Financial within 30 days from the date of issue or such other period permitted by relevant legislation.

In the event of your death, and dependant upon the beneficiary option you have selected, then upon receipt of satisfactory documentation your investment can be paid to either your legal personal representative (usually your executor) or the funeral bond Investor or your nominated funeral director to be applied towards your funeral expenses in such manner as considered appropriate.

If there is an excess remaining after funeral expenses have been met then any excess will be paid to your estate.

Any excess funds may be assessable in the hands of the recipient and will need to be included in the tax return in the year of receipt.

Yes. Where an investment is made in joint names, upon the death of the first of the joint investors, your investment will be distributed in full to pay for all or part of the funeral expenses of the life insured.

Yes. Most pre-paid funeral contracts will cover transportation of the deceased within a pre-determined distance outside of which additional charges can be levied on the estate.

The Foresters Financial’s Away From Home Cover protects your loved ones from the associated transportation costs, back to your chosen funeral director, up to a maximum of $3,000, should you die whilst traveling within Australia, provided their premises are within 100km from your permanent residence.

We recommend you refer to the Foresters Financial Funeral Bond PDS as other qualifying and claim conditions do apply to the Away From Home Cover.

There is no limit to how much you may invest in a Funeral Bond. The amount should be reasonably commensurate to defray the costs of your funeral.

Funeral costs you set aside in the Bond up to $14,000* (as at 1 July 2022) do not count in your assets test for payments from Services Australia (i.e. Age Pension, Carer Payment or Disability Support Pension). If you do not receive benefits, this threshold does not apply.

* This limit is indexed on July 1st each year.

Yes, through the Bond’s regular savings plan you can invest as little as $25 per month. These contributions can be made by: BPAY, cheque or direct debit from your bank account.

Forester’s main responsibilities are to ensure that your payment is properly invested in your name in accordance with the Funeral Benefit Fund Rules and appropriate State and Federal legislation and that your funds are not released or accessed by any third party until the funeral service is provided.

If your funeral director ceases to trade, the payments made into a Prepaid Funeral Plan are protected as the monies held in the Funeral Fund are in your name and there is provision in the contract for the service to be conducted by another funeral director.

Funds will only be released to your funeral director for payment of your funeral expenses, upon evidence that the service has been provided, and cannot be used for other purposes.

Funds held in the Foresters Funeral Fund may only be invested in a manner as specified in the Benefit Fund Rules and the Life Insurance Act 1995. Foresters is also regulated by the Australian Prudential Regulation Authority (‘APRA’) to whom it must report on a quarterly basis.

Prudential Standards issued by APRA prescribe that money held in the benefit funds of a Friendly Society may only be used for the benefit of its members.

If the Society were to cease to trade for any reason, the investments in the Funeral Fund could not be used to pay outstanding debts, but would continue to be held for the benefit of you, the Fund member.

It is important to note that when your Prepaid Funeral Plan is assigned to your contracted funeral director, they become the beneficiary  and ultimately, entitled to the Prepaid Funeral Plan investment proceeds to pay for your pre-arranged funeral. The funeral director has an ongoing obligation under the prepaid funeral contract to provide your chosen funeral arrangements irrespective of the value of the Prepaid Funeral Plan. This means that they bear the risk of any change in the value of monies invested.

The value of your contract under the Capital Guaranteed investment option is secure whereas the Sustainable, Growth or High Growth investment options are subject to volatility in the financial markets and may be subject to a negative return.

In the unlikely event, that you should cancel your prepaid funeral contract and/or reassign your contract to another funeral director, it is important to understand that with the exception of the Capital Guaranteed investment option, the value of your capital investment is not assured at the time of the cancellation or reassignment. Its value will be at the prevailing market price, which may be lower than the original investment.

Please talk to your contract funeral director and/or seek independent financial advice prior to making a change that may impact you.

You can enter into the Plan in joint names, however in such circumstances, upon the death of the first of the joint investors, your investment will be paid out in full and the surviving member will then have to enter into a new pre-paid funeral contract in order to meet their future funeral expenses.

As you have entered into a pre-paid funeral contract with a specific funeral firm, you are subject to the terms and conditions of that contract and as such, any changes to the contract, including altering your contracted funeral director, are subject to the specific contract conditions.

As these can vary between firms, we suggest you discuss any changes and how they are to be made with your contracted funeral firm in the first instance.

Subject to the terms of your pre-paid contract it is generally the case that you cannot transfer nor cancel your contract without the contracted funeral director agreeing to any change.

In the event that you move overseas you will firstly need to discuss your pre-paid funeral contract with your contracted funeral director.

If the funeral director agrees to cancel the pre-paid contract then your Prepaid Funeral Plan investment will remain in the fund in your name and at time of death will be paid to your estate to contribute towards your funeral expenses.

There is no maximum limit on how much you can invest as it is determined by the price of your pre-paid funeral contract. This applies even to persons in receipt of a means tested pension or a benefit from Centrelink or the Department of Veterans Affairs.

No. Under current legislation, there is no limit on the amount you can invest in the Plan if your investment is made in conjunction with a prepaid funeral contract.

The total amount invested in the Plan won’t be included as assessable assets in the assets test for payments made by Services Australia.

However, if you also hold a Funeral Bond, you will need to declare your investment in the Plan to Services Australia.

As your investment forms part of the pre-paid contract the entire value will be paid out to the funeral director upon proof that the agreed funeral service has been provided.

With a pre-paid contract it is the funeral director who assumes the financial risk that the investment performance of the fund will keep pace with increasing funeral expenses.

Yes.

Most pre-paid funeral contracts will cover transportation of the deceased within a pre-determined distance outside of which additional charges can be levied on the estate.

The Foresters Financial’s Away From Home Cover protects your loved ones from the associated transportation costs, back to your chosen funeral director, up to a maximum of $3,000, should you die whilst traveling within Australia, provided their premises are within 100km from your permanent residence.

We recommend you refer to the Foresters Financial Prepaid Funeral Plan PDS as other qualifying and claim conditions do apply to the Away From Home Cover.

If you change your mind for any reason, simply provide written notice of your intention to cancel your application and return your Certificate of Membership of Foresters Financial within 30 days from the date of issue or such other period permitted by relevant legislation.

If you wish to cancel your investment within this period, you should firstly contact your contracted funeral director as well as writing directly to Foresters.

Please note that legislation in some States or Territories provides for a processing fee to be paid to the funeral director when you enter into a pre-paid funeral contract.

We donate a portion of our management fee into the Foresters Financial Community Grants Account which is specifically used to grant money to Australian based charities that will create lasting positive social change within the communities in which we all belong.

There is no limit on your contribution to your policy in the first year. You can contribute whatever you wish in this first year as this will set your benchmark for the following years’ maximum contributions. Each subsequent year’s contributions can be up to a maximum of 125% of the previous year’s contributions in order to qualify for tax free withdrawals at maturity – this is known as the 125% Contribution Rule.

The 10 Year Tax Rule means the income component of your withdrawals from the Fund are tax-free after 10 years so long as you meet the 125% Contribution Rule. After meeting the 10 Year Tax Rule and the 125% Contribution Rule, when you make a withdrawal from the Fund, any income is not assessable income and therefore does not need to be declared on your income tax return.

Income in the Fund is taxed at the ordinary life insurance business tax rate (currently 30%) and paid for by Foresters Financial. As an investor, you do not need to declare any income received on your investment in your tax return or keep any capital gains record whilst you are invested in the Fund.

You can access your investment at any time. Any withdrawal within the first 10 years will result in some level of assessable income. The investor will need to declare the assessable income in their personal tax return in the year it was withdrawn. You will receive a tax offset amount equivalent to the tax paid by Foresters Financial in the Fund.

In order to receive investment earnings tax-free after 10 years, you must meet the 125% Contribution Rule. This rule defines the contribution amounts you can make each year into your investment bond. In the first year of your policy, your contribution amount is uncapped. However, from the second year onwards, your contributions each year cannot exceed 125% of the previous year’s contributions.
There is no limit as to the amount you can invest in the first year of your policy; this will set your benchmark. Each following year you can make the same contribution you did the previous year plus an additional 25%, therefore totalling 125%.

If you contribute more than 125% of your previous year’s contributions, the start date of the 10 Year Tax Rule will be reset for tax purposes. This means that in order to withdraw your funds tax free, you will need to keep your investment for a further 10 years from this new start date. You can still withdraw your funds, but the income component or your withdrawal will be assessable income. Similarly, if you stop contributing for a year, the next time you make a contribution a new 10-year period will commence from the date of that contribution for tax purposes. Setting up a regular savings plan is one way to avoid worrying about restarting your 10-year term to obtain the tax-free benefit.

We will notify you before the end of your policy anniversary to remind you about your annual contributions and the 125% Contribution Rule.

You can access your money at any time, however if you do so prior to 10 years you will not gain all the tax paid benefits and may be liable to declare the assessable income in your tax return in the year it was withdrawn.

All accounts are flexible and allow you to withdraw your money at any time, however if you choose to do so prior to 10 years it may be subject to tax implications if made within the first 10 years.

You can set up regular withdrawals to provide an ongoing income stream at any time – after meeting the 10 Year Tax Rule they will be tax free (subject to maintaining a minimum balance of $500); or
you can withdraw your policy balance in full or partially withdraw (subject to a minimum balance of $500) at any time.

The Fund pays tax on investment earnings at the ordinary life insurance business tax rate, which is currently 30%. Whilst invested in the Fund, investors do not need to record investment earnings on their personal income tax returns.

You can setup a regular savings plan from as little as $60 per month subject to the 125% Contribution Rule with no limit on contributions in the first year. We offer a broad range of contribution methods (direct debit, BPAY® or Cheque), including our automatic 125% Savings Plan.

Unit prices are currently calculated daily. A unit price is calculated by dividing the fund’s net asset value by the number of units on issue. Unit pricing information is available in our Product Disclosure Statement.

An Investment Bond can be taken out by an individual or in joint names, a child aged between 10 and a under 16 years old (with parental or guardian permission), a company or a trust. The listed individual(s) will become the legal policy owners and named Life Insured unless otherwise specified.
As part of our Investment Bond you also have the ability to nominate your beneficiaries and/or transfer ownership at any time.

If you, as the investor, are also the life insured, our Investment Bond allows you to nominate one or more beneficiaries (provided you are at least 16 years of age) to receive the investment proceeds from your policy in the unfortunate event of your death. The proceeds will be paid directly to your beneficiaries, tax-free, and not through your estate. This offers peace of mind by avoiding any unnecessary complications such as not having a will, waiting for probate or a will dispute.

You can change or cancel your nomination at any time. Where a nominated beneficiary passes away before the life insured, the investment proceeds will be allocated to the remaining beneficiaries in the same weighted proportions, or in the case of a sole beneficiary, the investment proceeds will form part of your estate.

Typically, if you are the sole Policy Owner and the named Life Insured, upon your death proceeds of your investment bond will be transferred to your nominated beneficiary(s), if selected, otherwise it will be passed onto your estate.

In the event of a joint ownership, upon the death of the first joint Policy Owner, the policy transfers to the surviving Joint Policy Owner and they become entitled to the full investment proceeds. The policy matures on the death of the last surviving Joint Policy Owner, or in the case of a different Life Insured upon the death of the Life Insured.

Yes, a child aged between 10 and under 16 years old is able to take out a policy in their name with parental or guardian consent. A child who is a policy owner is not allowed to make investment decisions, which includes switching, nominating beneficiaries or transfer of ownership. The child will be the Life Insured listed on the policy. In the unfortunate event of a child passing away, the investment proceeds will be distributed tax-free to the child’s estate.

If you are new to the fund then you are entitled to request in writing the cancellation of the policy within thirty (30) days upon receipt of confirmation of your policy.

If you are switching investment options then no cooling off period applies.

You can easily switch between all investment options to suit your personal circumstances. Please note that you will need to keep a minimum of $500 per investment option. There are no switching fees.

Unit prices are calculated daily. There are no investment transaction costs on contributions.  Investment management fees are applied to the net assets of the fund and calculated in the daily unit price.