Tag Archives: funeral insurance

Funeral Insurance Tips: Advantages and Disadvantages

Funeral Insurance Policies.

Funeral Insurance Policy

Insurance Plans

A funeral insurance policy often doesn’t do what it says (or rather, implies) on the advertising. Advertising for this type of senior insurance policy has changed a lot over the last few years, so it now says that it will contribute towards the cost of your funeral. In real terms, most will contribute much less than you might expect. We understand that over half a million people a year buy from funeral insurance companies, and as you might expect, some are better than others.

Advantages of Funeral Insurance Plans.

  • You can put aside a lower amount than you could for an proper prepaid funeral plan (though of course the benefits will be much lower too.)
  • No medical is required, the same as for a prepaid plan, but the insurance plan will pay out in full after an initial period, often 2 years.  So if you die in the first few years, a monthly paid life insurance can be better value than a monthly prepaid funeral plan. So if you are in very poor health and pretty sure to die in over 2 years and under (say) 6 years, this sort of plan could be a bargain.

Disadvantages of Funeral Life Insurance.

  • There is generally only accidental death cover in the “moratorium” period, typically 2 years.  If you should die from natural causes or by your own hand, some companies would pay back what you had paid in plus some interest.
  • In most cases (unless you keep increasing premiums) the buying power of the death benefit will shrink in line with funeral cost inflation.  Over the last 5 years that would have reduced the real value of a £3,000 insurance to a little over £2,000 – a big drop which will only get bigger over time.
  • Nearly all funeral insurances are “non profit whole of life” – policies which are not regulated by the Financial Conduct Authority.  They have NO CASH VALUE at any time.  This means that if you miss a few premiums because you are ill, then you die, your policy will not pay out a penny.  The longer you have paid in, the more you will lose.  Prepaid plans are the other way round.
  • Insurance premiums will typically have to be paid until you reach 85 or 90, so the longer you last, the worse value they provide. Prepaid plans are normally paid off within 10 years, so whilst the initial monthly cost may be higher, the long term value is much better.
  • With an insurance plan, you may well end up paying in more than your family get out towards your funeral.  Some companies “generously” say they will, if the policy is still running when you die, pay out all of your premiums as a death benefit.  In effect, you have made an interest free loan to them for perhaps 30 years.

Our Conclusion On Funeral Insurance.

Most people are guaranteed to lose out on these plans, and would be better off with even a very basic prepaid plan.

But there is a small group of people who could benefit.  They are people with terminal illnesses which are unlikely to result in death before 2 years are up, but are unlikely to survive for more that 6 to 8 years.   If you are unfortunate enough to be in the category, why not go for it?  Your family need to understand that early death will result in no significant benefit, but if you last through the moratorium (premiums back only) period, and don’t live for an inconveniently long time, then funeral insurance could be a bargain.

Give us a ring and we will chat the options through without obligation.

Funeral Insurance

Funeral Insurance Plans

Funeral insurance is not the same as a prepaid funeral plan. With normal life insurance, you might have to undergo a medical exam, while “funeral life insurance” companies will not subject you to that.  Some insurers load (increase) the premiums OR don’t pay out until you have survived – typically – 2 years. That makes funeral insurance a gamble, in our book.  But sometimes it is still the right thing to do.  We review every case on its’ facts.  But worse is to follow with many…

Funeral Insurance pay, pay and pay some more…

Funeral Plan Quotes

Funeral Plan Quotes

Additionally, you will often have to continue to pay for insurance for your entire life, and you may well end up paying more than your funeral actually costs. With many funeral plans, there are no age restrictions, unlike many insurance companies. If you miss a couple of payments, most companies will make no refund, and no payment whatsover when you then die.

What is better than funeral insurance?

Funeral plans are a very easy idea to understand, and you can either pay for the funeral in full at the start. Alternatively, you can pay whatever you can afford as a deposit with monthly payments over a year or up to 10 years.  One year schemes are usually interest free.

When your funeral arrives, you have a paid for the funeral services, and your family will incur little to no expense as a result.  They might need to pay a little bit in some cases, that that is much better than having to find several thousand pounds unexpectedly. Generally speaking, flowers and catering are not included (but you can add funds to make an allowance for them if you wish.)  But one of the reasons the Prepaid Funeral Review team are so important to making a wise choice is that some plans leave out vital things – such as the actual funeral.  So our independent professional advice is really comforting to folk determined to make life as easy as possible for those left behind.

Funeral Plans Gives You Peace of Mind, in addition to removing the future cost burden on your family members.

If, like me, you have seen families argue and fall apart over funeral arrangements, you can also use funeral plans to reduce their stress during an emotional time. When we organise your funeral plan, you often have several different options. Many companies will have a basic plan, which might include a simple coffin and no service. They might have a standard plan including a posher coffin, transportation and a service. The premium plan may include even more things such as a second car. Most funeral plan providers also allow you to pick and choose what you want at your funeral. What this means for you is that get to choose what you want included at your funeral. Perhaps a special kind of flowers?  A favourite song? Any detail that you wish can be added into your funeral plan. This way, your family members will not be able to fall out over what you would have wanted, and the already ultra stressful situation will not be even harder.

Funeral Plans save you and your family money and extra grief.

Many funeral life insurance companies will offer funeral plans based on the cost of a funeral when you invest in your plan. Funerals are expensive, and the prices continue to rise at above the rate of inflation each year. This means that your death can leave your family with a large financial burden. By purchasing a pre paid funeral plan, rather than a conventional insurance policy, you are saving them from the high costs of a funeral. Even if the prices have risen massively, your family will not have to pay the difference on the main items. By purchasing a funeral plan instead of funeral insurance, you are also saving yourself from paying ongoing premiums. If you are interested in finding a company that sells funeral plans, but the right ones for you, you have come to the right place – we can help find the most suitable plan for you

Funeral insurance if you still want to know more, click the link!

More on funeral insurance.

There are three types of life insurance which the public think of as funeral insurance, though it is rarely advertised as such as it isn’t.

  • Term insurance – this type of policy last for a specific number of years and then finishes with no cash value.   If you miss payments, then most policies will be cancelled and you will get nothing back.  If you die after the policy finishes, you get nothing.  In most case the funeral will cost far more than the death benefit which was fixed when you took the plan out  For the sake of argument, if your initial cover is for the full cost of the funeral, ten years later it will probably cover half of it with a bigger shortfall every year as inflation bites harder. Even worse are policies with a reducing death benefit.
  • Non profit whole life.  There are at least better than term insurance in that at least they will pay out when you die, if you don’t miss any premiums.  There is no investment element, so the only way to get cash back is by dying.
  • Flexible whole life: these are only sold by regulated financial advisers, so rarely appear as a funeral plan recommendations. They could be used but they are pretty complex and the premiums would have to be pretty high: but there would still be no guarantee.  We are not financial advisers, just funeral plan experts.