A guide to funeral cover

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

The simplest way to provide for your funeral is with over 50s life insurance. 

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

The simplest way to provide for your funeral is with over 50s life insurance. 

Faith Archer
Insurance expert
minute read
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Last Updated 6 OCTOBER 2022

How can I pay for my funeral?

Many people like to plan ahead, to ensure their loved ones can arrange and pay for their funeral after they die. It provides the peace of mind that your nearest and dearest will be able to sort everything out without any money worries.

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

  • Your family uses savings, which you’ve left behind through your estate, to pay for a funeral directly with a funeral director. 
  • You take out a over 50s life insurance policy which provides a payout towards funeral costs. However, it’s unlikely that the policy will payout quick 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. 
  • You arrange a prepaid funeral plan with your chosen funeral director. This locks in the cost at today’s prices, but you pay in a lump sum or monthly instalments (usually over five years). 

What is funeral 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 and a cremation.

When it comes to pre-paid funeral 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. 

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 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 policy terms carefully before you sign on the dotted line, to avoid burdening those left behind with unexpected costs.

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. However, it doesn’t yet regulate funeral plans themselves. 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). 

You may want to check whether a pre-paid funeral plan provider 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. 

Did you know?

From 29 July 2022, pre-paid funeral plans will be regulated by the Financial Conduct Authority (FCA). This will give consumers greater financial protection, as firms selling funeral plans must comply with FCA rules. In future, for example, if a regulated plan provider goes bust, your funeral plan should be transferred to a new provider on the same terms, or you should be able to claim cash compensation from the Financial Services Compensation Scheme. 

What else do I need to know about funeral cover?

If you 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.

Please note: we don’t offer funeral cover as a standalone policy. So, if you want to make arrangements to pay towards the cost of your funeral, it could be better to start with a quote for life insurance.

Does life insurance cover funeral costs?

Life insurance can provide your family with a lump sum, if you die while the policy is running. can provide your family with a lump sum, if you die while the policy is running to leave enough for all the expenses. 

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

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 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

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.

Your funeral wishes – what to consider

Knowing that your funeral costs are covered can give you peace of mind that your family won’t face a financial burden when you die. Setting out your final wishes could also help them through the stress and pain of planning your funeral. If you would genuinely prefer a simple funeral with very little fuss, make sure you let your family know, 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?
  • 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?

Top tips to do right now 

Dying is an expensive business. If you want to pay towards the cost of your own funeral:

  • 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.
  • Write down your funeral preferences, from burial or cremation to thoughts on flowers, music, readings and guests. Any decisions you make now will lessen the pressure on your loved ones at a difficult time. 
  • Keep any policy paperwork and documents setting out your final wishes in a safe place – and give copies to people close to you.

Frequently asked questions

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.

What’s the difference between a funeral plan and life insurance?

The payout from a funeral plan can only be used to pay for your funeral costs. Once your beneficiaries receive a life insurance payout, they can use it for whatever they want.

If you want part of a life insurance payout to specifically go towards funeral costs, you should consider putting your life insurance in trust. That way you can leave a letter of wishes for your trustees. 

Another difference between the two is that with a funeral plan, you may be able to pay in advance for some parts of the funeral, locking them in at today’s prices. Meanwhile, if your loved ones use money from life insurance, they face paying whatever costs have risen to in future.

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, 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 pay-out if you die.

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