Over 50 life insurance or a prepaid funeral plan?

Over 50 life insurance or a prepaid funeral plan? main image

Nothing is certain in life, they say, except for death and taxes. At least it is possible to do something about the certain costs of a funeral whenever they might come around.

Taking care of those costs is something likely to be of general concern, given the rate at which these seem to be rising. A story in the Mail on Sunday newspaper on the 24th of May 2016, for instance, revealed that the average cost of a traditional funeral is already in the region of £3,600, including the £700 in cremation charges that the majority seem to favour, or around £1,750 for a burial plot and a further £500 for the gravediggers.

A number of reports have also suggested that today’s cost of arranging a funeral are set to increase at a rate outstripping inflation in the years to come. Any method for not only making your funeral arrangements in advance – thus ensuring that your final wishes are more likely to be realised – but also saving towards or paying for those arrangements at today’s prices is going to be welcome news.

The good news is that there are two broad ways of doing so.

Over 50 life insurance

The first reflects the long-established practice of effectively saving for your funeral arrangements through the use of an insurance policy – in return for your payment of a monthly instalment, the insurance policy pays out an agreed cash lump sum upon your death, which your spouse or family can use towards paying for your funeral costs.

This was the principle behind the many friendly societies which sprang up throughout the UK in the nineteenth century. These days however, the choice may be even easier once you reach middle age thanks to the availability of special over 50 life insurance plans.

These give you guaranteed acceptance – without the need for a medical examination – a fixed monthly premium and in some instances even over 50 life insurance with a free gift. We do, suggest, however, that you choose the over 50’s policy that most suits your needs, rather than picking the one with the most attractive gift!

What you need to consider

There are several considerations relating to using an over 50 life insurance policy for future funeral costs which you need to take in to account:

  • the benefits are paid to your designated family member (a spouse, partner or child), who still has responsibility for interpreting the funeral arrangements you may have had in mind;
  • although the amount of the lump sum cash benefit is assured from the outset, the effects of inflation mean that this might not cover all the funeral expenses in the future;
  • because you are paying monthly premiums on this whole of life insurance policy for the remainder of your life (or, with some insurers, until you reach the age of 90), it is possible that the value of the final payout is less than the total amount you have paid in premiums.

Prepaid funeral plans

Another option is a prepaid funeral plan.

This has the twin benefits of allowing you to plan your funeral down to the very last detail including nominating the funeral director whom you want to make those arrangements, and pay for them at today’s prices, effectively inflation-proofing your funeral director's costs.

This will save your family from having to guess what type of funeral you would have wanted and of course the stressful job of arranging your funeral.

The money you have paid in advance is safely protected until needed by the provider either placing the funds into an independent trust or purchasing a life insurance policy on your behalf.

Upon your death, these funds are released to your nominated funeral director.

What you need to consider

Compared to over 50’s life insurance, prepaid funeral plans are a way of ensuring that your spouse or children are not faced with making difficult decisions and potentially facing an extra burden when you die

You should note, however, that prepaid funeral plans are typically more expensive overall than over 50 plans, so your final decision may be based on your current affordability.

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