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A guide to funeral cover

No one wants to leave their loved ones with expensive funeral bills after they’ve died. Getting life insurance with funeral cover is a way to protect them against the cost of the funeral. Find out more in our helpful guide.

No one wants to leave their loved ones with expensive funeral bills after they’ve died. Getting life insurance with funeral cover is a way to protect them against the cost of the funeral. Find out more in our helpful guide.

Written by
Tim Knighton
Life, health and income protection insurance expert
Reviewed by
Faith Archer
Insurance expert
Last Updated
11 JANUARY 2024
8 min read
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How does funeral cover work?

Funeral cover can provide the peace of mind that your loved ones will be able to sort everything out without any money worries. You can either 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.
With a life insurance policy that pays out in the event of your death, it’s unlikely that it will 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 pay in a lump sum or 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 you leave behind for 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. Read more about the average cost of a funeral, as 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 pre-paid 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.

What does funeral insurance cover?

You can choose the amount you leave behind 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?

If you’re wondering whether to take out life insurance or a funeral plan, it’s important that you understand the difference between the two.

There are several types of life insurance, each of which can cover you in slightly different ways and for different amounts. For example, 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 out towards your funeral expenses. Funeral insurance plans won’t cover any other costs your family may face after you’re gone.

So, if you’re weighing them up against each other, life insurance vs funeral plan, you need to decide if 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.

What’s not covered by a prepaid funeral plan?

Again, it 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 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 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 FCA and the FSCS (Financial Services Compensation Scheme).

Did you know?

From 29 July 2022, pre-paid funeral plans became regulated by the Financial Conduct Authority (FCA). This gives consumers greater financial protection, as firms selling funeral plans must comply with FCA rules. For example, if a regulated plan provider goes bust, your funeral plan should be transferred to a new provider on the same terms. If not, you should be able to claim cash compensation from the Financial Services Compensation Scheme.

Does life insurance cover funeral costs?

Life insurance can provide your family with a lump sum if you die while the policy is running, to leave enough for all the expenses they may face after you’re gone. It could be used to pay off a mortgage, cover living costs or your funeral.

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.

Another option is to have your life insurance written in trust. This can give you more control over how the payout should be used, and 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 also 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 funeral costs entirely, 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 in the policy in trust, so any payout avoids inheritance tax and can be doled out 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.
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Frequently asked questions

What is the disadvantage of funeral cover?

There are several disadvantages with funeral cover. Here are some things to consider:

  • Funeral plans often get more expensive as you get older. This is important to consider as you head towards retirement.
  • Depending on when you die, you could end up paying more into your funeral insurance plan than it pays out when you die.
  • Funeral insurance plans hold no cash value. This means, if you cancel the policy, you won’t get any of your money back.

How much does a funeral cost in the UK?

According to SunLife’s Cost of Dying Report 2022, the average cost of a funeral in the UK is £8,864**. This includes everything: the funeral itself, professional costs and the send-off. Even the most basic funeral is around £4,056 on average. 

**SunLife (2022), Cost of Dying Report

To work out how much a funeral could cost, now and in the future, our expert partners at Assured Futures have created a funeral calculator

Should I take out an over-50s plan to cover my funeral costs?

If you’re over 50, you might want to consider an over-50s life insurance policy to cover some or all of your funeral costs.

This type of life insurance doesn’t require a medical and it guarantees a small lump sum payment when you die. Just bear in mind that if you live a long and healthy life, you could end up paying more for the policy than the eventual payout.

Find out about the pros and cons of over-50s life insurance.

What if I take out a pre-paid funeral plan, then change my mind?

Most providers will give you a full refund if you cancel your plan within 30 days. After that, you may be charged a cancellation fee.

Will death in service benefit cover my funeral costs?

If you have death in service benefit as part of your employment package, your family should receive a tax-free lump sum payment if you die. Death in service is typically worth three to five times your annual salary. This could be used to cover your funeral costs.

However, unlike life insurance, your death in service cover ends if you leave your job. So, if you leave the company you work for or lose your job for some reason, your family will no longer receive a payout if you die.

Compare over 50s life insurance with funeral cover

Get a life insurance quote that includes funeral cover and start saving now. We don’t offer funeral cover as a standalone policy.

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Tim Knighton - Life, health and income protection insurance expert

"The fact that over 50s life insurance offers guaranteed acceptance is a huge benefit. You don’t need to worry about passing any health checks and you can make sure your beneficiaries are looked after. Just make sure that you plan for inflation, otherwise you might leave your loved ones short when they need" 

Learn more about Tim