The Daily Mail & Which? Slam Insurance Funeral Plans
“The insurance funeral plans that pay out LESS than you’ve saved”
goes the headline. The implication of the article is that insurance funeral plans are poor value and you would be better off saving in a building society.
There is certainly an element of truth in that. The problem is that if you save £10 a month for 2 years plus a day, and then die, you would have saved £240 with a few pence interest. That won’t even buy the casket! If you had bought a “bad value” insurance based plan, you would have created a payout of around £2,000 which might pay for a basic funeral if you shop around. Well, if your relatives shop around!
So insurance funeral plans are good value if you die early (but not too early, or there will just be a refund of premiums paid.) However, if we use the example published in the Mail (page 47 on 16th May 2012) of buying the insurance at age 64 and dying 26 years later, you would have paid in around £3,12o.
What would you get back? According to the article Axa Sun Life Over 50 plan would pay out less than half that amount! Foresters, Aviva, Asda, Tesco, Legal and General, and Sainsburys are even worse. Top payer would be CUNA Mutual followed by Shepherds Friendly and Engage Mutuals Funeral Plans.
When you bear in mind that your savings would have earned some interest too, the benefits of the life insurance element of insurance funeral plans have to be pretty high to make them good value.
Here at the PrePaid Funeral Review, we rarely recommend insurance based funeral plans except in very rare circumstance (and we’re not giving away trade secrets on the site!)
However, they do have a place. They are just massively oversold and massively misunderstood – I would argue that their sales pitch is rather misleading because the public just don’t take the trouble to really understand what they are buying! According to the Daily Mail, nearly half a million people bought these plans last year. We reckon that more than half of then should have bought a proper prepaid Funeral Plan – and perhaps there are a million who still should still cut their losses and buy a full funeral plan. Click the link to enquire! But don’t expect anything back from the old insurance based plan.