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.
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.
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.