A Guide to Funeral Cover

How does funeral cover work?

Funeral cover can provide reassurance that your loved ones won’t have to worry about paying for your funeral.

When someone dies, the money from their estate will usually pay for their funeral. But if there isn’t enough money to cover it, a life insurance policy or funeral plan can help.

You can take out an over-50s life insurance policy which provides a payout towards funeral costs, or you can arrange a prepaid funeral plan with your chosen funeral director.

A life insurance policy might not pay out quickly enough to cover the funeral costs upfront. This means your loved ones may need to pay for your funeral arrangements before being reimbursed by your life insurance policy.

With a prepaid funeral plan, you can pay a lump sum upfront or in monthly instalments over a set number of years. It has the advantage that it locks the cost of some parts of your funeral at today’s prices.

What is funeral cover insurance?

Funeral insurance is one way of covering the costs of your funeral.

Policies can vary greatly: some will just cover the funeral director’s bill, while others will pay for the wake or a plot in a cemetery, for example.

There can be a significant difference in price between a burial, a cremation and a direct cremation.

A direct cremation doesn’t involve any official ceremony and you can’t visit the person who’s died in the chapel of rest. It’s an unattended cremation that takes place at a crematorium chosen by the funeral provider.

When it comes to prepaid plans, or any other service that promises funeral cover, make sure you read the small print in your policy very carefully. Some costs may not be met fully by your plan and, if this happens, your family may face paying the remainder.

How much does a funeral cost in the UK? 

According to SunLife’s Cost of Dying Report 2025, the average cost of a simple funeral in the UK is £4,285. That’s up from £4,141 in 2023.

To work out how much a funeral could cost, now and in the future, our expert partners at Howden Life & Health have created a funeral calculator.  

What does funeral insurance cover?

You can choose the amount you leave for your loved ones, which can be put towards:

• Funeral director costs

• Transportation of the deceased

• Cremation or burial fees

• The cost of a coffin or casket.

It’s important that you estimate these costs, taking into account today’s prices, but also ensure your plan takes into account future inflation. Otherwise, your policy’s payout could leave your loved ones short.

Is life insurance better than a funeral plan?

It depends on whether you only need to cover the costs of the funeral, or if you have loved ones who will need extra support when you’re gone.

A life insurance policy could pay out enough to cover a mortgage and other living costs for a family left behind.

Meanwhile, funeral planning insurance only pays towards your funeral expenses. Funeral insurance plans won’t cover any other costs your family may face after you’re gone.

What’s not covered by a prepaid funeral plan?

What’s not covered depends on your plan and the level of cover you choose.

Typically, any service that isn’t provided by a funeral director is excluded from your cover; for example, flowers or catering.

The type of funeral service is also a factor. Burials and cremations are treated and priced differently. If you plan on a burial service, the actual burial plot is not usually included.

It’s very important that you read the policy terms carefully before you sign on the dotted line.

How safe is my money in a prepaid funeral plan?

A provider will typically place any payments you make either into a trust fund or invest them in an insurance policy that pays out when you die. The Financial Conduct Authority (FCA) has rules to safeguard your money in these places.

If you choose an over-50s life insurance to cover the cost of your funeral, you are fully protected by the Financial Conduct Authority (FCA) and the Financial Services Compensation Scheme (FSCS).

Does life insurance cover funeral costs?

Life insurance can provide your family with a lump sum if you die while the policy is active. It could be used to pay off a mortgage, cover living costs or your funeral.

How your beneficiaries use this money is up to them. Some set a portion aside for funeral costs, although these can run to several thousand pounds. Burials are usually more expensive than cremations, so it’s important that you understand and plan your cover appropriately. 

Another option is to have your life insurance written in trust. This can give you more control over how the payout should be used. You could specify that you want some of the money put towards your funeral costs. If your life insurance is written in trust, the payout doesn’t need to wait for probate, so your beneficiaries will get the money sooner.

Is there state help for funerals?

It’s possible to get help from the government with funeral costs. Usually, you need to be receiving certain benefits, normally at least one of the following:

• Income Support

• Income-based Jobseeker’s Allowance

• Universal Credit

• Child Tax Credit

• Housing Benefit

• Pension Credit

• Working Tax Credits in relation to disabilities or severe disabilities.

If you’re entitled to money from the estate of the person who’s died, your government payments will be deducted from the amount you receive. The estate includes any money or property they had, but not the home or personal possessions left to their spouse or civil partner.

The government’s Funeral Expenses Payment may contribute to the following:

• Burial (including coffin) or cremation fees

• Funeral director’s fees

• Doctor’s certificate, death certificate or other documents

• Moving the body more than 50 miles within the UK

• Travel expenses.

The Funeral Expenses Payment applies to England and Wales. If you live in Scotland, you can apply for a Funeral Support Payment.

It’s important to note that your payment doesn’t usually pay for the entire funeral costs, so do keep that in mind when making arrangements, to avoid any expensive surprises.

Keep your funeral plans and costs covered

If you genuinely prefer a simple funeral with very little fuss, make sure you share your funeral wishes with your family, so they don’t feel forced to fork out for all the bells and whistles.

Preferences you might want to think about:

• Burial or cremation?

• Where would you like to be buried or cremated? 

• Religious or humanist ceremony, or a direct funeral with no service at all? 

• Music, songs or hymns? 

• Flowers or donations to charity? 

• Transport, including a hearse and for family members? 

• Would you like a headstone? 

• Type of coffin – simple or elaborate? 

• Readings, psalms or a favourite passage or poem? 

• Who should be invited, do any readings or carry the coffin? 

With your funeral plans decided, you’ll need to decide how it’ll be paid for. Unfortunately, and perhaps strangely, dying is an expensive business. If you want to help take care of things and pay towards the cost of your own funeral, here are some things to think about: 

• Weigh up how you can provide the money: from leaving savings, taking out a specific funeral plan or using life insurance. 

• If you do opt for a prepaid funeral plan, compare policies and check the small print, so you understand what’s covered and what isn’t. 

• If you opt for life cover, consider writing the policy in trust – this could help protect any payouts from inheritance tax, and your beneficiaries may receive the money before probate. 

• Keep any policy paperwork and documents setting out your final wishes in a safe place – and give copies to people close to you.