Life Insurance for Funeral Costs 2024

When we think about the reality that someday we will die, one of the key concerns is how our family will cope financially. This often focuses upon how will mortgages continue to be paid, how will the family cope with a loss of salary or pension into the home. 

An urgent issue is how are the family going to pay for funeral costs. Funeral costs differ between a cremation and burial and they can massively change depending upon where you live in the UK. MoneyHelper compiled some data last year that showed that funerals in the UK usually cost between £3,900 to £7,900*.

This doesn’t take into account any headstones/plaques that you want, the wake, flowers, or other things that you would want to do.

Let’s take a look at the types of life insurance that you usually use for funeral costs.

There are two main types of life insurance that are designed for funeral costs:

• Whole of life insurance
• Over 50s life insurance

These policies are designed for funeral cover because they don’t have an end date. They will continue to be active until you die, provided that you keep up to date with the premiums.

A lot of life insurance is known as term life insurance. This means it has a specific term, an end date, where the person is no longer insured. This type of life insurance is usually used to match how long a mortgage lasts, until you no longer have dependent children, or if you need life insurance for gift planning.

Whole of Life Insurance

Over 50s Life Insurance

Over 50s life insurance sometimes get’s quite bad press. Some people say that you are better off putting the money into a savings account rather than paying into the insurance. Well, this depends upon what is concerning you. If you die relatively soon then an Over 50s life insurance policy could be a good call, but if you live well into your 90s then the bank account savings would be better.

Every person is individual and it really comes down to what is going to give you the best peace of mind.  A huge positive of Over 50s cover is that you can get the policy without any medical underwriting, which can be brilliant for people with medical conditions that mean they can’t get life insurance through traditional routes. Over 50s plans usually act as accidental death policies only for the first 6 months to 2 years, depending upon the insurer. After this time you are insured against any cause of death, including any medical conditions that you already have.

Because they will insure anyone regardless of medical history, Over 50s life insurance policies tend to be more expensive than whole of life insurance. Here’s an example:

• A 66 year old, non-smoker,  wanting to leave £10,000 to their next of kin, to help with funeral costs
• An Over 50s life insurance plan of £10,000 can cost £46 per month

This is almost double the cost of the whole of life insurance. But let’s say that this person does have a medical condition that will mean that their premiums for whole of life cover are rated. It wouldn’t be unusual for a rating on the whole of life insurance to see the premium go from £24 per month, to £36, £48, possibly up to £84 per month or more. 

It’s incredibly important that when you are looking for life insurance to cover funeral costs that you see all of the options available to you. 

What about Funeral Plans?

Funeral plans are really interesting. Let’s be clear that they are not insurance, they are very different to whole of life insurance and Over 50s life insurance.

For a while there were quite a lot of companies that were offering funeral plans, but this changed a few years ago (July 2022). The reason there was a big change is because Funeral Plans didn’t used to be regulated and there were many that felt that this was not appropriate. There should be measures and safeguards in place to make sure that if you purchase a Funeral Plan, that it is going to do what you want it to do.

So not too long ago the Financial Conduct Authority (FCA) insisted that Funeral Plans within the UK had to become regulated. So the good news is that any Funeral Plan that you see in the UK should now come with protections associated with being a regulated product, such as the Financial Services Compensation Scheme.

A funeral plan is essentially a pre-paid funeral service. It means that you can pay for your funeral at today’s prices and the company agrees to pay for your funeral when you die, without any further charges to your family. Each provider offers a different service so it’s best to shop around if you do want to look at a funeral plan.

The choice between a whole of life insurance policy, Over 50s life insurance policy and funeral plan, is not one to be made quickly. Each one does something different and each can take some of the financial burden off your family when you die. It’s this end goal of how best to support your family that needs to be what leads you to your decision.

Our award winning advisers will help you chose the right critical illness policy to match you and your needs.