The cost of dying in the UK is becoming a worry against the rising funeral costs. In 2021, the average price of dying was £8,864, and it’s likely to increase in the coming years.
Funeral insurance is one of the first things that comes to mind in garnering protection against those rising costs, but what is funeral insurance exactly? There’s often confusion between a funeral plan and life insurance policy, given that they both address post-death scenarios.
However, a funeral plan and life insurance are different services. This guide will examine their nuances and analyse which would be a better choice to plan a funeral.
Funeral plans and life insurance often get placed in the same pot, considering that the result of the policies is usually to help cover funeral expenses. However, there are definitive differences between a funeral plan and a life insurance policy.
The fundamental difference is that a funeral plan is a service that ties funds up to paying for a funeral. Life insurance will pay out upon death, with funds not restricted for any particular use.
Funerals might be at the top of the agenda if you’re starting to think about passing away and making arrangements for your family. The rising funeral costs are more of a concern than ever, and how will they get covered if you’re not around to address them?
Both funeral plans and life insurance policies can provide funds to cover funeral expenses and bring peace of mind. But which one would suit you best?
We compare plans from the leading funeral providers
We can decipher whether a funeral plan or a life insurance policy would be better for your circumstances by analysing services, coverage, and benefits. Find more intricate detail of the two below.
A funeral plan is a service wholly dedicated to covering funeral expenses. Persons who purchase a package from a funeral plan provider will see their funds for funeral directors’ fees. There are often disbursements for other costs associated with carrying out their final wishes.
Funeral plans have a broad spectrum of options to customise your funeral according to the service you want to have or your budget. The most affordable plans include cremations without services. One could opt for the highest tier that offers a more comprehensive funeral.
While there are many variations to funeral plans, there are a general set of elements each will cover.
What Does a Funeral Plan Cover?
The core principle of a funeral plan is the dedicated cover of standard funeral expenses. Most funeral plan providers will offer a basic funeral package that covers the following:
You’ll be able to select from plans that offer more coverage for your funeral at an increased expense, such as floral tributes or mourners for limousines.
What Advantages Are There to Funeral Plans?
What benefits do an investment in a funeral plan bring?
So how does life insurance contrast?
A life insurance policy is a contract where there’s an agreement in exchange for monthly premiums; the insurer will pay your beneficiaries a lump sum upon death. Some of this money may find its way towards a funeral, but the key difference from a funeral plan is that these funds are not restricted.
Suppose your family or spouse are the nominated beneficiaries. In that case, they can use the funds how they wish after you pass away. Life insurance does not dedicate funds to a funeral or liaise with funeral directors to carry out your service.
So what does a life insurance policy cover?
What Does a Life Insurance Policy Cover?
Life insurance coverage may vary on the policyholder’s circumstances. However, there is a general idea of cover outlined below:
Most life insurance policies require the policyholder to continue paying premiums until death to honour the lump sum paid to beneficiaries, which would be more expensive than a funeral. However, there are advantages to life insurance.
What Advantages Are There to a Life Insurance Policy?
The benefits of life insurance policies include:
There are many circumstances where a life insurance policy may be more beneficial to family and loved ones, considering that funds do not tie into another service. However, a prepaid funeral plan is fast becoming the preferred option where funeral costs are concerned.
The disadvantages to life insurance policies are the critical points in making funeral plans preferable for post-death remembrance services. Life insurance often has the stigma of a rigorous claims process, paying more into the policy than you get out, and difficulty organising funerals after payout.
So how does a prepaid funeral plan contrast these disadvantages?
Should a funeral be under more serious consideration, a prepaid funeral plan may be more tailored to your wishes.
Are you interested in finding a funeral plan? Fill out the form below with a few details to get an overview of funeral plan providers suited to your needs and a quote for the packages offered.