Should I Take Out Funeral Life Insurance?

Thinking about your death may not be the easiest topic to confront but, from a financial planning perspective, it’s important to many people to make arrangements for their funeral because they don’t want family and loved ones to be burdened by the cost.

Think Tank International Longevity Centre estimates suggest the total cost of a funeral in 2020 could exceed over £7,000.

You can ensure you have the funds to pay for your funeral by contributing to a funeral plan or by making it part of your life insurance package, otherwise, these fees may be passed on to your family or dependents.

We explain more about what funeral cover is and how you can use life insurance to help cover funeral costs.

The following topics are covered below…

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What is a life insurance funeral plan?

Typically, Life insurance policies don’t include paying for your funeral, which is why some people opt for a life insurance funeral plan where you take out life insurance and add on separate ‘funeral cover’. This way you know that your funeral is paid for before you die.

If you’re keen to pay for your funeral before you pass away then there are three main ways you can do this is:

  • By having life insurance with a funeral cover add-on.
  • Buying specific funeral insurance.
  • Taking out a funeral plan.

It’s worth noting that providers will assess your application based on your age and medical history. This will influence the type of cover they offer, and the price it will cost you.

Can I take out life insurance which includes funeral cover?

Yes, as explained above, you can take out life insurance with funeral cover.

To compare the costs of life insurance with or without additional funeral cover, get in touch and we’ll introduce you to one of the independent financial advisors we work with.

Being independent means they have access to all the insurance providers in the UK and will use their knowledge, experience and tools to ensure you get the right cover for the most competitive price.

What’s the difference between life insurance and a funeral plan?

Basic life insurance is a lump sum that’s paid to your estate when you die, while a funeral plan will specifically pay for your funeral fees, as explained below.

Life insurance

With life insurance, your nominated dependents will receive a lump sum and how they choose to spend it is up to them.

This means it can help with expenses such as a mortgage, school fees etc. They could use the money to pay for your funeral but it may not be the most reliable method.

It may take many weeks after death for the life insurance payout to be made, and if there are any investigations or complications relating to the death there could be setbacks, which could end up delaying your funeral too.

Funeral plan

With a funeral plan, you pay for your funeral before you die and the lump sum paid out to your family must be spent on your funeral.

Usually, you can expect:

  • To pay for a particular amount of cover. Typically, this will cover the fees for the funeral director to conduct the funeral.
    You may be able to ‘lock’ the prices to what they cost at the time of your policy so that if they’ve increased when you die, your family won’t have to pay the higher rates.
  • Some policies cover all the costs and some only contribute towards costs so be sure to check the terms before you sign on the dotted line. There may also be limitations on what your provider will pay for, for example, they may cover a cremation but not a full church service.

If you’re not sure whether to take out life insurance or a funeral plan, consider all the pros, cons and benefits; they may vary greatly between providers.

For example, some won’t payout if you’ve contributed payments for less than 12 months. There may also be premiums attached so you may need to pay in for a minimum of two years in order to get the full funeral fees and if it’s less, your provider may only pay out a percentage.

To get a clear idea of the kind of policy which might suit your needs and avoid paying more than you need to for the cover you want, make a quick online enquiry to talk to one of the specialist advisors we work with.

They will be happy to answer all your questions and give you a clear idea of how much the cover you want might cost.

With access to insurance providers across the UK, they are well-positioned to get you the best possible cover at the best available price.

Does life insurance cover funeral or burial costs?

If you have a life insurance policy when you die your dependents will receive a lump sum payment. They can choose to pay for your funeral with it but it’s not automatically set up to pay for your funeral unless, in addition to your life insurance, you have also taken out additional ‘funeral cover’.

Check the details of the cover as your provider may pay for some aspects of your funeral and not others.

How to pay for a funeral with no life insurance

If you haven’t made provisions for your funeral to be paid for then it will probably be up to your family to find a way to cover the costs.

They may be able to meet the costs by using funds from your estate if there’s enough, although often probate means the money may not be free to use at the time of your funeral.

If you don’t have family, or enough money in your estate to pay for your funeral, typically the local authority can arrange a Public Health Funeral. These are usually cremations and fairly basic.

If you’re on a low income and are in receipt of benefits, you can also apply to receive Funeral Payment whereby you’ll receive funds towards your funeral.

This can cover costs such as paying for the death certificate, burial fees and up to £700 for extras like your coffin or flowers.

Some employers also have a ‘death in service’ policy which means that if you die while you’re employed by them, your beneficiaries you may receive a payment they could use towards your funeral.

Speak to an expert

If you still have questions about life insurance funeral cover, the next step should be to speak with an independent financial advisor, like the ones we work with.

Give us a call on 0808 189 0463 or make an enquiry for a free, no obligation chat and we’ll introduce you to an advisor with specialist knowledge of life insurance and funeral plans. Remember they are all regulated by The Financial Conduct Authority and so abide by strict rules and standards.

They will be happy to answer all your questions and can talk you through the various different plans available from different providers across the UK.

They will use their tools and knowledge to ensure you get the right cover for the most competitive price. 

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