Funeral Insurance

It’s no great secret that when it comes to planning funerals they can unfortunately come complete with quite a hefty price tag.

For this reason, increasingly more people (and particularly those over the age of 50) are now starting to consider the many benefits of funeral insurance, or funeral insurance cover.  There are certainly many benefits to be had and in this article we take a look at the concept of both funeral insurance and funeral insurance cover.

How do I pay for my funeral and what do I need to think about?

There are basically three ways of paying for your funeral:

  1. By relying on friends or family to pay for it once you’ve passed away.  This typically happens by them using monies from your estate – for example, any savings you might already have.  However, if your assets are locked (perhaps through a property which will need to be sold following your death), then they may well find themselves having to find alternative means of covering the funeral cost until such time as these assets are formally released through your Will and/or other arrangements you may have made in respect of your estate.  Suffice it to say, this can prove to be quite a stressful time – particularly if family members are left having to find funds at short notice at any already stressful and upsetting time for them.
  • Your funeral costs could be covered through a life insurance policy you might hold, either privately or perhaps through an employer.
  • Through a pre-paid funeral plan i.e. a funeral insurance, or funeral insurance cover. These types of plans are typically paid for by way of monthly instalments or even as a lump sum payment, payable upfront.

What will funeral insurance – or funeral insurance cover – pay for?

As with any type of insurance policy, any benefits you might receive under your funeral insurance cover will naturally vary between each provider so it’s important you research the terms and conditions of each policy option very carefully.

If you’re looking for very basic cover (for example, to include just the funeral director’s bill and burial or cremation costs) then you might want to consider paying this as one lump sum, since many providers will add an arrangement fee onto your chosen plan, thus making it much more expensive in the long run.

If, on the other hand, you’re looking for something a bit more bespoke then it’s important you consider any specific wishes and have these incorporated into your funeral insurance.  For example, you might want to pay for transportation costs, a preferred coffin type, the actual service, flowers, a venue and food or refreshments for your ‘wake’ or ‘celebration of life’.  

Suffice it to say, when it comes to funeral plans there’s certainly no ‘one size fits all’ so it’s important you shop around and get the best deal based on your specific needs and requirements.

How do I know that my money is safe if I opt for funeral insurance cover?

Once you’ve chosen a provider then you should check with the Funeral Planning Authority to ensure that they’re fully regulated before you enter into any type of funeral insurance plan or cover.

The Funeral PlanningAuthority are a professional body and will ensure that any funeral costs are fully covered should anything happen with your chosen provider.  They’re also regulated by the Financial Conduct Authority who have very strict rules to ensure that your money is completely safeguarded through its regulated members.

Another point worth noting is that if you pay for your funeral insurance using a credit card, then you should be covered under s.75 of the Consumer Credit Act 1974.  Under this particular Act, all credit card providers have a duty to protect any purchases over the amount of £100.00 if ever there’s a problem with the goods or services you purchase – for example, if your chosen funeral plan provider ceases to trade.

Is there anything else I need to know about funeral insurance?

The best advice when it comes to choosing the best funeral insurance or funeral insurance cover is to shop around for the best deal and not to be afraid when it comes to asking questions.  Remember, this is an important financial investment for both you and your family so it needs to betaken very seriously to ensure your wishes are fully taken care of.

Also remember that all funeral insurance policies operate in very different ways and can include (or ‘exclude’) certain eventualities – just in the same way that car or home insurance does.

You should also bear in mind that some payments can increase each year (for a maximum period of 20years) and are payable until you reach the age of 90, or earlier death.  Consequently – depending on how long you live, then you could pay more to your funeral insurance than the cost of the actual funeral itself.  What’s more, you’ll need to pay all premiums as and when they become due since any failure to pay will most likely result in your plan being stopped and you’ll get absolutely nothing back.

Certain consumer groups across the UK have previously sought to argue the point that those individuals who pay for their funerals in advance could well find that their loved ones are still left with extra costs after they die and that funeral insurance cover isn’t always as transparent as it could be. To that end, the Government opened a consultation on the issue of ‘pre-paid funeral plans’ in June 2018 and, at the time of writing, is a closed consultation which aims to consider improvements about how the sector is regulated [1].  Of course, the outcome on this now remains to be seen.

In the meantime, however, the advice remains the same.  If you’re thinking about taking out funeral insurance – or funeral insurance cover– then research it, and research it well. It’s an important investment and certainly one that shouldn’t be rushed or taken lightly.