With the average funeral costing £4,184 in 2020, according to SunLife, it’s no surprise that people are seeking ways to pay for their funeral in advance, but can over 50 life insurance pay for your funeral?
Guaranteed acceptance with no medical and low monthly premiums mean the cash payout on over 50 life insurance is considerably less than what you could get with underwritten life insurance, so it’s unlikely to provide enough to cover all the costs of your funeral, but that doesn’t mean it couldn’t help towards the cost.
In this article, we explore some of your options.
Can life insurance pay for my funeral?
Whether life insurance could pay for your funeral will depend on the amount of cover and the type of life insurance you choose. There are two main types of life insurance to consider:
- Term life insurance – it provides a guaranteed lump sum payment if you die before the end of the agreed term. If you survive that term, nothing is paid out – so your family might still be left struggling to fund your funeral when you do die.
- Whole of life insurance – this pays out whenever you die – so your beneficiaries could use at least part of that payout to cover the cost of your funeral.
This type of insurance often requires a detailed medical report and you may find the cost of cover prohibitive if you suffer from a pre-existing medical condition when the insurance commences.
However, if you’re limited on budget or in poor health, over 50 life cover could offer another way to leave some money that could be put towards the cost of your funeral.
The size of the guaranteed cash payout from over 50 life insurance is determined by the monthly premium you choose. If you die shortly after the initial waiting period of one or two years, it is likely to be considerably more than the amount you’ve paid in. However, as premiums are payable for life or until you are 90, there’s a chance you could pay more into the plan than the cash sum paid out when you die.
Over 50 life insurance is:
- Simple – applying is quick and there are no medical or health questions to answer
- Accessible - you’re guaranteed to be accepted if you’re a UK resident aged 50-80 (85 if you choose the SunLife over 50 plan).
- Affordable - monthly premiums can be as low as £3.70 a month, depending on your age and the plan you choose.
- Flexible - the cash sum is guaranteed to pay out when you die, and it can be used by your beneficiaries in any way they choose.
Funeral Benefit Option - put your Over 50 plan payout directly towards funeral costs
If you’re keen to do more, you can make sure the payout from your policy goes directly towards the cost of your funeral, by choosing an over 50 plan with funeral benefit option.
You simply agree to have your cash sum paid straight to a designated funeral director, such as Dignity or Golden Charter, when you die. They will then put it towards the cost of their services. It costs nothing to do, can be reversed if you change your mind and the funeral director will even contribute an extra £250-£300 to say thank you for choosing them to conduct your funeral.
When the time comes, all your family will have to do is make one phone call and the funeral director will guide them through the arrangements.
If your funeral costs less than the combination of your cash sum and the funeral director’s contribution, any money left over will be paid to your estate. On the other hand, if it costs more, your family will need to pay the balance to the funeral director.
So, even though over 50 life insurance may not cover everything, funeral benefit option offers a straightforward way to use your over 50 plan to help your loved ones at a difficult time both financially and emotionally.
Can you pay for your funeral in advance?
A pre-paid funeral plan does just that.
- You arrange and pay for specific funeral services in advance, and in doing so, freeze the basic costs of your funeral at today’s prices, avoiding the effects of inflation over the years to come.
- All of the services included in a funeral plan are guaranteed and usually include the funeral director’s services set out in the plan. The minister’s and doctor’s fees and a guarantee or contribution towards the cremation or burial costs can also be included.
- Like over 50s life insurance, no medical examination is needed, your acceptance is guaranteed.
- You can pay in instalments. If you die before all instalments have been paid, the amount paid up to that point can be put towards your funeral expenses and any remaining balance would need to be met by your surviving relatives. Although, some plan providers such as Dignity and Co-operative Funeralcare will cover the cost of your funeral if you have been paying into the plan for at least 12 months and your payments are up to date.
It’s also reassuring to know that most of the leading funeral plan providers have chosen to register with the Funeral Planning Authority and adhere to their rules and code of practice. This ensures the funds you have paid are kept securely on your behalf in an independent trust or used to buy a whole of life insurance policy, which is guaranteed to payout on your death.
In July 2022, the Financial Conduct Authority will be taking over the regulation of prepaid funeral plans, which means all funeral plan providers will have to be authorised.
Individual funeral directors may also offer prepayment options. However, there is a risk that the firm may go out of business before your death – and if so, it may be difficult to recover the payments you have made.
So, will an over 50 life insurance plan pay for your funeral?
The answer is it depends on how long you live and funeral costs in the future.
A prepaid funeral plan guarantees that all the services included in the plan will be provided when the time comes. However, if the cost of a funeral plan is outside of your monthly budget then over 50 life insurance could help your family with your funeral costs.
If you are using your over 50 life insurance to help with funeral costs then you should also write down your funeral wishes and keep safe, so that when the time comes your family will know what you wanted.
In summary, it is possible to plan for the future, make the funeral arrangements you want to see implemented when the time comes and start paying for those expenses now, either through a prepaid funeral plan or by way of an over 50s life insurance policy.
Compare over 50 life insurance
Help your family pay for your funeral costs.