How to plan and pay for your funeral
Planning and paying for your own funeral is not exactly a nice subject to think about. However, it is important to know your options when it comes to planning and paying for things in later life, especially if you need help to pay for a funeral.
Funeral costs are continually increasing and with the worry of leaving all the costs to your loved ones, it’s a good idea to have some kind of plan in place for your funeral arrangements before you pass away.
In our guide below, we discuss the several ways to pay for a funeral, including does life insurance cover funeral costs and whether it’s better to choose life insurance or a funeral plan.
Ways to pay for a funeral
While of course it’s not going to be nice to think about or plan your own funeral, it will help to alleviate the additional stress and worry of your loved ones once you pass away knowing that your funeral costs are taken care of.
Knowing what you want your funeral to look like can help you work out the costs associated with planning the funeral that you want once you’re gone and it can help you work out a means of paying for your funeral so the financial burden isn’t left to your loved ones once you pass away.
Let’s take a look at some of the ways to pay for your own funeral.
Over 50s life insurance
Life insurance, specifically over 50s life insurance, can be thought of as a sort of funeral plan. This type of policy can act like a savings plan for your funeral in which you make monthly payments towards your life insurance policy and once you die, your loved ones can make a claim and use the money to pay for your funeral.
It’s important to note that you can’t use the money in advance of the payout from the over 50s life insurance and the payout will go to your beneficiaries, not to you.
It works by you paying an agreed-upon monthly sum to the life insurance provider who will then pay out the sum to your beneficiaries once you die. With this method, you can plan your funeral accordingly as you will know the expected amount of money that will be paid out when you pass away.
With some types of over 50s life insurance policies, you will continue paying the premiums until you die, whereas some others work by you paying monthly amounts for a certain amount of time or until you reach a certain age when you can then stop paying the premiums, but you will still receive a payout.
Another option that you can use to plan and pay for your funeral is to set up a savings account specifically for your funeral.
While savings accounts are usually associated with saving money for occasions such as a wedding, a holiday or even a house deposit, you can also use your savings to pay for your own funeral.
You can set up any kind of savings account that you like, providing that your beneficiaries will be able to access it to use the funds for your funeral once you pass away. It’s also a good idea to be aware of approximately how much your ideal funeral might cost so that you know how much money you need to aim to save.
Pre-paid funeral plan
A pre-paid funeral plan is also sometimes referred to as “funeral insurance” in the UK and it works by you agreeing to pay a fixed amount for your funeral, either in one lump sum or in fixed monthly instalments.
One of the biggest advantages of a pre-paid funeral plan is that you effectively “lock in” the price of your funeral when you take out the funeral plan, so even if funeral costs continue to rise, you will only pay the amount in your funeral plan.
However, it’s important to be aware of the inclusions of your funeral plan to see what is and isn’t covered by your plan when it comes to your loved ones arranging your funeral. For example, some pre-paid funeral plan providers don’t cover burial or cremation costs as these are constantly changing and increasing. Therefore, your policy might only cover things like flowers, funeral cars and other associated costs and your loved ones may have to foot the bill for cremation or burial out of their own pocket.
If you haven’t chosen one of these options to pay for your funeral and you die without telling your loved ones how they should pay for your funeral, then they will likely take matters into their own hands.
There are several ways your loved ones may choose to pay for your funeral, including:
- Paying for it out of your estate - however, this can usually only be done once the probate process is complete, in which case they’d have to borrow money against the value of your estate.
- Paying in instalments as agreed with a funeral planner.
- Paying for it out of their own pocket.
- Checking whether the deceased had any hidden savings or means of paying for their funeral that they didn’t tell their loved ones about.
Who pays for a funeral if the deceased has no money?
If someone dies without a funeral plan, life insurance or any money in their bank accounts or estate, then the family of the deceased may decide to pay for the funeral themselves.
However, this isn’t an expectation or a requirement and if the deceased has no family or their family is not willing to cover the costs of a funeral, then the financial responsibility will usually be passed to the local council or hospital who may arrange a Public Health Funeral.
This is usually a very basic and simple funeral and usually covers the costs of a coffin and funeral director costs who will be responsible for taking the deceased to the crematorium or cemetery.