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What Is Funeral Insurance?

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None of us enjoy thinking about our death and the thought of making provision for our funeral arrangements may seem a little morbid. It may make sense, however, especially with funeral costs rising higher than the rate of inflation.

Not only that, but if you have funeral insurance in place, it means that:

  • Those left behind will not have the financial worry of the costs associated with arranging your funeral;
  • You can feel confident that your wishes will be carried out
  • Depending on the type of insurance you have, the funeral costs are guaranteed to be met (if you have a pre-paid funeral plan).

Different types of funeral insurance plans

There are several finance products that are often referred to as funeral insurance. It is important you understand the difference between them as the product features and benefits are not alike.

Pre-paid funeral plans

A pre-paid funeral plan does what it says on the tin. You:

  • Pre-pay for your funeral arrangements (either in a one off lump sum of around £3,500-£4,200, or via regular instalments for up to 20 years);
  • The amount you pay will depend on the funeral plan you choose. So, if you want to go out with a bang and have limousines for your family to take them to the cemetery or crematorium, thank you cards and a superior coffin, then you can select a top of the range plan. Or you can opt for a basic plan. It is your choice.

The beauty of pre-paid funeral plans is that everything is completely paid for. So even if the costs for the funeral arrangements have increased by the time you die, they are guaranteed to be met, with no additional costs to your loved ones (unless they choose optional extras).

In a nutshell, pre-paid funeral insurance plans are a way to inflation-bust the cost of being buried or cremated, as well as the associated funeral director’s fees.

It is not life cover and once you have paid for the plan, it is there for life.

Over 50s life insurance

You may have seen advertisements on the TV and in magazines offering over 50s life insurance plans that are promoted as a way of meeting the cost of your funeral.

With guaranteed acceptance and no medical required in order to take advantage of this life insurance plan, it can be useful for people who are unable to get when you die, it is important to note that:

  • Over 50s life insurance plans only pay out if you die within the term of the policy. Typically this is up to the age of 85 but depends on the individual policy (so could be sooner or later);
  • The amount that is paid out in the event of your death during the policy term is fixed and may typically be anywhere from £2,000-£10,000. This amount may not be enough to cover all of your funeral costs;
  • If you survive the term of the policy then the policy lapses and you receive nothing;
  • In some cases, depending on how long you are paying in to the policy for, you could actually pay in more than your family receives in the event of your death.

Making plans for your funeral while you are very much alive can make sense. It can give you the peace of mind of knowing that everything is taken care of when you die. Plus, your family will not have to find the money to give you a good send off, nor have to worry about the ‘details’ of your funeral, as you can specify this at the time you take out your pre-paid funeral plan.

Hopefully this brief article has highlighted the differences between what are generically known as funeral plans, but which are, in fact, very different products.

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