A guide to funeral cover

The cost of a funeral can grow quickly, so it’s important to know the facts so that your family isn’t left to deal with the expense at a trying time. Our guide will get you clued up on pre-paid funeral plans and plenty more.

The cost of a funeral can grow quickly, so it’s important to know the facts so that your family isn’t left to deal with the expense at a trying time. Our guide will get you clued up on pre-paid funeral plans and plenty more.

Debbie Thompson
Life insurance expert
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Posted 23 JANUARY 2020

How can I pay for my funeral?

Many people like to take out a form of funeral cover to ensure their loved ones are able to pay to arrange their funeral after they have died. It gives you peace of mind to know that they’ll be able to sort everything out without any added worry.

There are lots of different ways of paying for a funeral. The main ones include:  

  • Your family uses savings, which you’ve left behind through your estate, in order to pay for a funeral plan directly with a funeral director
  • Your funeral costs could be covered as part of a pay-out by a life insurance policy
  • Or, you could commit to a pre-paid funeral plan from a provider. This is typically paid for in monthly instalments or as a lump sum

What is funeral insurance?

Funeral insurance acts as a way of covering the costs you leave behind for your funeral services.

Policies do vary greatly: some will just cover the funeral director’s bill, while others will pay for the wake or a plot in the cemetery, for example. Learn more about the average cost of a funeral, as there can be a significant difference in the price between a burial and a cremation. 

When it comes to pre-paid funeral plans, or any other service that promises funeral cover, be sure to read the wording of your policy very carefully. Some costs may not be met fully by your plan, and if this happens then your family may have to pay the remainder.

How safe is my money in a pre-paid 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 pass away. The Financial Conduct Authority (FCA) has rules to safeguard your money in these places; however, it doesn’t regulate funeral plans.

You may want to check whether a provider you’re dealing with is signed up to the Funeral Planning Authority (FPA) – a professional body that (along with its members) pledges if a provider goes bust, it will look into paying for ceremonies covered by funeral insurance.

Also, if you pay using a credit card then you could be protected by Section 75 of the Consumer Credit Act 1974. Under the Act, a credit card provider has to protect purchases over £100 if there’s a problem with a good or service you buy, or if the company you are buying from goes bust.

What else do I need to know about funeral cover?

If you’d rather go ahead with a pre-paid funeral plan, be aware that different policies work in different ways. It’s worth noting too that there have been concerns raised more broadly about pre-paid funeral plans. 

Consumer groups have argued that individuals who pay for their funerals in advance could find that their relatives are lumped with extra costs after they die – and that this isn’t always as transparent as it ought to be. To that end, the Treasury opened a consultation process on the subject in the summer of 2018. 

So, once again, make sure you’ve done a thorough review and comparison of all your funeral payment options – not just pre-paid funeral plans – before you make a decision. We don’t offer funeral cover as a standalone policy. Therefore, in order to get funeral cover, it could be better if you start with a quote for life insurance. 

The good news is that it can take you just a couple of minutes.

What does funeral insurance cover?

Funeral insurance provides your family with a lump sum to cover the costs of your funeral in the event of your death. What’s covered by funeral insurance varies among providers and policies. Typically, any service that isn’t provided by a funeral director is excluded from your cover, for example, flowers or any catering requirements.

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

It’s very important that you read the terms of your cover carefully before you buy, to avoid leaving hidden costs to those left behind.

Does life insurance cover funeral costs?

Life insurance leaves your family a lump sum upon your death. How they use this money is up to them. Some set a portion aside for funeral costs, although these can run into thousands of pounds. Burials are usually significantly more expensive than cremations, so it’s important that you understand and plan your cover appropriately, in order to leave enough for the expense.

If you’d prefer to guarantee a lump sum is set aside for your funeral, consider taking out a funeral insurance policy to avoid any unwanted surprises.

Is there state help for funerals?

It is possible to receive help from the Government with funeral costs. However, you may not be eligible for the support. Usually, you need to already be receiving certain benefits, normally at least one of the below:

  • 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 then be deducted from the amount you receive. This excludes assets being passed to a spouse or civil partner.

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

  • Burial (including coffin) or cremation expenses
  • Funeral director’s fees
  • Doctor’s certificate, death certificate or other documents
  • Moving the body more than 50 miles within the UK
  • Travel expenses

It’s important to note that your payment does not usually pay for funeral costs entirely, so please keep that in mind when making arrangements, to avoid any expensive surprises.

What are the options for funeral cover?

  • Funeral plan - specifically contributes towards your funeral costs. Plans can be taken out with a lump sum payment up front, or spread over a monthly agreement.
  • Life plan - sometimes referred to as ‘whole of life insurance’, is a form of life insurance that’s guaranteed to pay a fixed sum upon death. This money can then be used by the recipient however they wish. Funeral expenses are a common use for life insurance funds, but please ensure that your policy includes enough to cover the full expense.
  • Pay out of your estate – once the person has died, their bank account will essentially be frozen, turning into the deceased’s ‘estate’. However, banks normally allow for funds to be released from the account, with proof of death confirmation, in order for the funeral to be paid for.
  • State support – if you’re entitled to one or more benefits specified above, you may be entitled to financial support from the Government. It’s unlikely that all of the expenses will be covered, but it’s certainly useful if there are no other options available to you.

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