What is funeral Insurance?

Funeral insurance is a term that is frequently used for Over 50 life insurance and Prepaid funeral plans, rather than an actual insurance policy in its own right. Both options will help you pay for a funeral in advance but in very different ways.

Over 50s Life Cover is an insurance policy that provides a cash sum when you die that the majority of family’s in the UK use to help with funeral costs; which is why it’s commonly referred to as funeral insurance. Pre paid funeral plans on the other hand is not an insurance policy; instead you are paying in advance for a specific set of funeral services, namely the funeral directors costs and in some cases, the third party fees.

The following information explains how both options work so you can decide which is the best funeral planning option for you.

What is the difference between funeral insurance and a funeral plan?

When it comes to putting plans in place to help with funeral costs, as mentioned there are a couple of financial products you can turn to:

  • A Funeral Insurance Policy
  • A Prepaid Funeral Plan

A Funeral Insurance policy also known as Over 50 Life Insurance pays out a cash sum when you die that your family can use to help with funeral costs. In truth the cash can actually be used for anything; pay off outstanding bills, help family members or leave as a gift however the main reason people choose these plans is for funeral arrangements.

Therefore with this type of policy your family has flexibility to use the money how they want. They will still need to make the funeral arrangements but will have the cash sum paid out to help with the cost. Do keep in mind that the cash sum paid out is fixed so inflation will reduce its value over time. (Our ‘How much does a funeral cost’ section will help you understand more about the costs associated with arranging a funeral)

You simply pay a monthly premium from as little as £3.70 based on what you can afford or how much money you wish to leave to your family and are covered for the full cash sum after an initial period of one or two years*. If you were to die during this initial period, the money you have paid into the plan to that point would be fully refunded.

Get an Over 50s Life Quote

A Prepaid Funeral Plan on the other hand gives you the opportunity to arrange and pay for your funeral services in advance, freezing costs at today’s prices therefore avoiding future inflation. So in addition to saving money and helping your family financially, a funeral plan also removes the worry of arranging a funeral. Just one phone call when the time comes and your funeral director will take care of everything as detailed in your plan.

You can choose to pay for your funeral plan either in one go, with costs ranging between £2,700 to £4,300 or by monthly instalments.

With a monthly payment funeral plan, premiums start from £14 depending on your age and the plan you choose and you are covered for the funeral service once you have completed your payments. If you were to die prior to the payments being complete, the money you have paid into the plan would go towards your funeral costs and the family would be asked to pay any balance.

Get a Funeral Plan Quote couple walking in country

Breaking down funeral insurance cover in more detail

Funeral Insurance Plans

As mentioned, funeral insurance cover is another name for guaranteed over 50 life insurance, which essentially is a whole of life plan.

Whole of life insurance does exactly what it says on the tin; it covers you for the whole of your life, paying out a lump sum of money when you pass away. As a result, it tends to be more expensive than ‘term insurance’ that only provides cover for an agreed number of years, perhaps whilst you still have a mortgage to pay or your children are going through education.

When it comes to whole of life insurance, there are two options you can choose:

  • Guaranteed Over 50 life insurance
  • Regular Whole of Life Insurance

Guaranteed Over 50 plans offer a 100% guarantee that your application will be accepted as long as you are within the age range, typically 50 to 80 years of age and a UK resident. It’s quick and easy to arrange with absolutely no medical questions to answer, so the state of your health isn’t taken into account – another good reason why they have become favourable in the UK as funeral insurance plans.

Regular whole of life insurance has a much longer application process that includes questions about your health and lifestyle. Therefore with this type of life cover there is a chance your application will be rejected however if accepted, the cash sum paid out is higher than with a guaranteed plan.

Funeral Insurance Costs

Monthly costs can be very low on a guaranteed plan; it all depends on how much money you wish to leave to your family and your age. The premiums are fixed ranging from around £4 to £70* but as you are required to pay them either for life or until you are 90*, it is important to choose a monthly payment that is affordable and that you are comfortable with.

Also with this type of policy depending on how long you live, there is a chance you could pay more in than the cash sum paid out.

Regular life cover is based on your age, health and lifestyle so the higher the risk, the more expensive the plan. Having said that you could receive up to 40% more life cover than with the guaranteed over 50 plan, so if you are in good health it may be worth considering.

Do be aware that with some life cover your premiums will be fixed for life however others.

Is funeral insurance a good idea?

Funeral insurance could be a good idea if want to remove the emotional and financial worry of arranging and paying for a funeral from your family and have the funds available. However, it may not be a good idea if you are not clear about how chosen plan works.

Regardless of whether it is a funeral plan or and over 50 life insurance plan, it is important to compare what is on offer and read the terms and conditions before you decide.

Key Considerations and Next Steps

Get a funeral Insurance quote

Getting a funeral insurance quote is quick and easy to do. Our Guaranteed Over 50s Life Insurance comparison service provides further information on how plans work and you can look at a range of quotes from market leading providers.

Compare life insurance

Alternatively our regular life insurance section will provide you with more information and quotes, again completely free of charge and with no obligation.

Compare funeral plans

Finally if you are still weighing up your life insurance vs funeral plan options or would like to understand more about what is a funeral plan and how it works, we have a wealth of information on what to look out for, how funeral plans compare and of course their prices.

Our ‘are funeral plans safe’ section also provides important information on the regulation of prepaid plans and how to ensure your money is held securely.

*Depending on the UK provider you choose

It's worth noting

The term funeral insurance is used for both Over 50 Life Insurance and Prepaid Funeral Plans by some companies.

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