When planning for your family’s future, the costs of funerals can’t be ignored. You can either ensure your life insurance pay-out is sufficient to cover the costs plus leave some extra for your loved ones to cover other expenses such as living costs or your debts or you can pre-pay your funeral costs.
These policies can also be bought separately from your life insurance, enabling your loved ones to keep more of the life insurance pay out they receive upon your death.
As with everything though, there are certain things you should know about funeral plans so you can decide if it’s worth having one of these plans in place, whether it’s on its own or in addition to your life insurance policy.
What your family receive with a life insurance policy
A cash lump sum
It should be noted though that you will need to have your life insurance policy in place early. The reason for this, is that next to no insurer will pay out a guaranteed lump sum should you die within the first year of taking out your policy. Then you have to keep the payments up because if you start missing them, you could forfeit the premiums paid, leaving your family out of pocket.
More leeway for your loved ones to spend the money as they like
You may have debts, you may have a mortgage, and you may just want to leave some cash to your loved ones to help ease their life a little. One thing’s for sure and that’s the fact that leaving some money behind for your loved ones will make their life easier when you aren’t around to provide for them.
With a life insurance pay-out, the money is there for them to spend as they wish or require. The only thing they may need to dip into it for is to cover the burial costs, be it a ground burial or a cremation burial. A cremation burial is the cheapest.
What your family get with a funeral plan
- Your wishes catered to because you make the arrangements
- Your plan will cover the majority of expenses (not all) eliminating some of the financial stress
- Your loved ones don’t need to deal with as much of the difficult decisions since you’ll have made the arrangements already such as your coffin and funeral directors of choice etc.
- Your price is locked in at today’s price, thus protected against inflation. That’s a potential savings of thousands of pounds, giving that today’s price for a gravesite burial is estimated to cost £3,702 on average.
What you need to know that isn’t covered by a funeral plan
When you buy a funeral plan, you’re not going to get everything fully inclusive.
These are items you can expect not to be covered by a funeral plan:
- Any catering costs
- The price of venue hire
- Any costs associated with the removal of prosthetic limbs or other living aids such as a pacemaker
- Burial plots
- Organist and/or a choir
- Doctor’s fees for medical and/or death certificates
- Limousine hire
Looking at the list of things that’s not included in the majority of funeral plans will give you a real sense of what’s going to be better for you.
If you look at the list above and think that you’d want the majority of those fees covered in your funeral plan, then life insurance is your best bet. The lump sum pay-out will be able to be spent by your loved ones to carry out whatever your wishes are.
Of course, you can have both so that some of your funeral plans are covered, with your life insurance providing some cash to use to cover any excess.
What not to expect is to have a funeral plan that covers the entire cost of a burial. In fact, some will only cover a cremation burial and only pay £1200 towards the cost of a ground burial.
The bottom line is to ensure you read the small print and know what your plans cover and do not cover. You may be surprised by what’s not.