Is it worth taking out funeral cover?

gravestones in cemetery

The unequivocal fact of the matter is, we’re all going to die one day. We can choose to ignore this unavoidable end game and live every day like it’s our last, or perhaps look forward to our demise in a slightly creepy/sci-fi-ish way (a la Walt Disney and the other folk), who have put their faith, body – and lifetime’s savings – into the deep freeze of Cryogenics laboratories.

Or maybe you fear it, swear by every vitamin tablet under the sun and never leave the house in case today’s the day.

It makes no difference really, because the end result is the same and your fate is (probably) already mapped out.

So with this very much in mind – and to alleviate the financial burden of your nearest and dearest – it’s about time you thought about the cost of your funeral.

There’s no point in putting off any longer, as it’s a bit unfair expecting your loved ones to have to stump up when the time comes/destiny calls/the Grim Reaper knocks on the door.

Thankfully there are several ways you can arrange this while you’re still very much in the land of the living, including taking out funeral cover as part of your life insurance policy, a dedicated funeral plan or simply citing your send off as part of your estate.

With regards to the first option mentioned there, it’s worth remembering that a life insurance policy needs to encapsulate enough cover to deal with your final send off – as it’s not just the cost of living which is directly affected by inflation, but death can equally end up leaving you a bit pale around the financial gills.

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Don’t Look Back in Anger. Ensure You Allow For Funeral Costs

Irrespective of which political party holds sway in the UK, we’re being taxed to the hilt right up to the bitter end, so therefore it shouldn’t surprise anyone to learn that funerals don’t come cheap either.

According to research conducted by The Guardian in 2014, one in every five families were left out of pocket after settling funeral costs in recent years, and bearing in mind that the average cost of a funeral as we pen this stands at around £5,500 it’s not difficult to understand why.

That figure takes into account such items as venue hire, flowers and catering – all of which is vital if you’re going to afford your dearly departed a sensitive and memorable final journey.

Returning to those popular funeral cover options available to you, and life insurance is strongly recommended. Although avoid tying any funeral cover into an existing – or recently deliberated over – term life insurance policy; as if you survive longer than your pre-defined term expiry, it’s not going to bail you or your family out when it comes to the crunch.

Whole of life policies on the other hand, will, and are particularly useful at funeral times as by and large they tend to pay-out an agreed amount on the policyholder’s death. You can take out a whole of life insurance policy anytime, providing you’re 16-years plus, while over 50s plans prove a timely reminder to an ageing population if and when consumers opt into one of these types of hugely popular insurance products.

Elsewhere and many people plump for a pre-paid funeral plan and can be readily purchased through your local funeral director and are commonly flagged up for ‘freezing the cost at today’s prices’ (yet have nothing whatsoever to do with cryogenics before anyone asks).

Prices vary depending on what the individual policy comprises of and the funeral cost provider at the point of purchase, and generally speaking a potential policyholder can make financial arrangements to cover the whole shebang – from the ceremony and wake to the plot itself – or merely cover the funeral director’s rudimentary costs.

Repayment option-wise and the consumer is normally faced with either paying for the policy in the one lump sum up-front or spread the cost over a number of months at a more affordable rate. Although you will of course end up paying more in the long run when taking interest into account.

Like Taxes, Death is Unavoidable. So Prepare for the Worst Today

With pre-paid funeral plans you need to be well aware of ALL the facts before you sign up to anything, as it’s too late when you’re gone and your family/dependents are left to pick up any financial tabs which weren’t mentioned earlier.

For example, some funeral plans have been at the centre of controversies, with relatives of the recently deceased reporting that the plans don’t always cover all the expenses involved in the funeral process, and have themselves been left to dig that much deeper into their own pockets to fund any subsequent shortfalls.

Also it’s imperative that the policyholder ascertains precisely what the accepted protocol is should they pass away while still in the throes of repayment of their own funeral plan and what would happen in the event of the plan provider going out of business in the meantime.

Another equally valid point worth raising is what the acknowledged procedure is if the policyholder meets with their end while overseas? After all then there’s the whole logistical operation to organise and fund, throwing up more understandable concerns.

The tip is to ask ALL these questions with a funeral plan provider before committing to a policy. End of.

The third most financially viable option of dealing with life after death (but obviously before death) is putting a certain amount away for the rainiest of days in your savings account. But don’t forget, if your savings account is a joint one held with your partner they’ll immediately become the sole benefactor as the surviving party of the joint account, whereas if it’s just in your name then  the account will be immediately locked down and form an integral fiscal component of the deceased’s estate.

Many people choose to put aside enough extra in their savings account to cover (or at least hopefully cover) their own funeral costs, and the majority of financial institutions will release the funds to the executor of the last will and testament/administrator once they’re in receipt of a copy of the death certificate.

Finally the state do make some provisions to help with the funeral and burial costs for those on a low income and below a certain financial threshold, however they amount to little more than the bare minimum (price of the coffin, burial/cremation fees/flowers/funeral director’s fees) and will only be ratified and relinquished after the surviving partner/family members/dependents complete an assessment to determine qualification, which in turn is the barometer as to what they’ll receive from a monetary standpoint.

What We Think…

We definitely believe that everyone should plan and aim to provide for their own funeral costs at some point in their lives, but it’s very much up to the individual as to who, which plan, how much, etc…

That said, a whole of life insurance policy seems the most useful, cost-effective and reliable means of paying for your own end to our minds and the one we would recommend. Answering the question as to whether it’s worth it? Definitely, as you can’t put a price on death…

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