While funeral plans are popular ways to ensure your funeral costs are covered, other options may suit you better.
One way to protect your family against the expense of a funeral is to take out a financial product that will cover the costs. One of the most popular products is a financial plan.
Funeral plans are a type of insurance policy that allows you to pay for your funeral in advance. Most funeral plans enable you to make the arrangements for your funeral in advance, ensuring your end-of-life wishes are carried out.
However, there are alternatives to a funeral plan:
Life Insurance Policies
One option is to take out a life insurance plan designed for those over the age of 50. These insurance plans pay your family a fixed lump sum on your death. But there are some shortcomings to these plans. The greatest disadvantage is that the pay-out is set and will not increase to meet inflation. You could end up paying out more in premiums than your family gets back.
If you purchase a £10-a-month policy when you turn 50, with a pay-out of £2,767, by the time you reach 73, you will have paid the same amount as the claim.
However, these products are usually sold without the requirement of medical screening and are a good option for those unable to afford standard life insurance due to health issues.
The biggest benefit of putting money away into a savings account is earning interest on your funds. However, your earnings in interest may not match the rising costs of funerals.
The rise in funeral prices is estimated at around 4%, with the average funeral coming out at approximately £3,757. Burials and cremations cost in the region of £4,267 and £3,247, respectively.
It would be best to set up the savings account jointly with a trusted family member, to ensure they can access your savings after your death.
Your funeral cost can be paid from your estate, and most banks or building societies will usually release the funds if they are given a copy of the death certificate and itemized billing compiled by the funeral director. The estate’s executor will cover the funeral costs2 on the invoice, or a friend or family member will be able to pay for the funeral and claim the money back from the estate.
A Few Common Questions
Funerals can be an expensive responsibility to leave your family. However, there are ways to ensure your loved ones will be left with the funds they need after your death.