Can life insurance pay for my funeral?

Can life insurance pay for my funeral? main image

According to SunLife’s Cost of Dying Report, funeral costs have increased by 128% since 2004. With such a meteoric rise, it’s understandable that more of us are looking into how to help meet these costs during our lifetime and wondering if life insurance can pay for a funeral.

In this article we explore how different types of life insurance may help fund your funeral, paying particular attention to over 50 life insurance and funeral plans.

In the simplest terms, a prepaid funeral plan enables you to make and pay for funeral arrangements now and fix the cost at today’s prices, while over 50 life insurance enables you to leave some cash behind when you die, that could be put towards your funeral bill.

What is funeral life insurance?

Funeral life insurance is just another term for life cover that could help pay for a funeral. There are a few options to choose from, all of which will pay out a cash sum when you die. However, the contribution you will be able to make will depend on the type you choose and the amount of cover you can afford.

  • Prepaid funeral plan

A prepaid funeral plan could be a good option if you want – and can afford – to make and pay for funeral arrangements in advance. A funeral plan guarantees the services specified are paid for and will be provided when the time comes. Typically the specified funeral director’s costs are guaranteed. Then plans either include a contribution or guarantee for the cremation or burial fees, the ministers fees and the doctors fee.

You can choose to pay for this cover in one lump sum or monthly.

  • Direct cremation plan

If you’d prefer minimal fuss and any money you leave to be used for other things, you could opt for direct cremation. A direct cremation plan covers a simple cremation with no funeral service, and so is much cheaper than a more comprehensive funeral plan.

  • Over 50 life insurance

This is a form of whole of life insurance that guarantees to accept any UK resident aged 50-80 (85 with SunLife) and guarantees a cash payout on death, whenever that may be. There are no medical or health questions to answer and monthly premiums start from as little as £3.70 a month, so it can be a good choice if you’re in poor health or don’t want to spend too much.

Guaranteed acceptance and affordable premiums does mean the cash payout is considerably less than underwritten life insurance. So, a single over 50 plan may not cover all your funeral costs, but it could make a helpful contribution and you can take out multiple policies if you wish.

  • Over 50 life insurance with funeral benefit option

Funeral benefit is a free option that enables the cash sum from your over 50 plan to be paid to a designated funeral director when you die, and put directly towards the cost of their services. The funeral provider, such as Dignity or Golden Charter, will also deduct a further £250-£300 off the final funeral cost by way of thanks.

If the final bill is over the combined total of your cash sum and the funeral director’s contribution, the balance will need to be paid by your family. If it is under, the balance will be paid to your estate.

  • Whole of life insurance

Whole of life insurance also guarantees to pay out a lump sum whenever you die but does require you to answer health and lifestyle questions and possibly undergo a medical when you apply.  If, for example, you smoke or have a pre-existing medical condition, your monthly premium is likely to be high, which could be prohibitive. You may even be declined, in which case no medical over 50 life insurance, could be worth considering.

  • Term life insurance

Term life insurance covers you for an agreed number of years rather than the rest of your life. If you die within the policy term, the cash lump sum will be paid out, However, if you die beyond the policy term, your funeral will need to be paid for by other means.

Can I get life insurance to cover funeral costs?

Yes, whole of life insurance could potentially pay for your funeral because it will pay out whenever you die. Term life insurance could also do so, provided you die while your policy is in force. However, you would need to ensure the cash payout was large enough to cover any future increases in funeral costs, which could be expensive.

An over 50 plan alone may not cover the cost of a funeral in full but it can make a helpful contribution, especially if you take advantage of the funeral benefit option.  Ultimately though, if you want to guarantee certain funeral services are arranged and paid for in your lifetime, consider a prepaid funeral plan.

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