Protect your loved ones from spiralling funeral costs
After passing 50, it’s normal to think more seriously about the future and what you may leave behind.
When we reach our senior years, many of us have largely paid off the mortgage and our children have left home.
Naturally, you start to consider the cost of your passing, which has now reached on average £9,204.
As parents and/or grandparents nobody wants to pass this significant expense onto our loved ones.
Below, we examine the pros and cons of a funeral plan vs an over 50s plan in covering rising funeral costs…
|Funeral plan||Over 50 plan|
|Guaranteed acceptance (aged 50 – 85)||✔||✔|
|No medical questions||✔||✔|
|Quick & easy application||✔||✔|
|Protected against inflation||✔||✖|
|Terminal illness cover||✖||✔|
|Financial Conduct Authority (FCA) registered service||✖||✔|
|Funeral Planning Authority (FPA) regulated||✔||✖|
Over 50s funeral plan or life insurance?
Both a prepaid funeral and an over 50s plan provide protection for your loved ones when covering the major financial implications of your passing.
Whichever option you choose, you’ll have taken the selfless step to ensure that the necessary funds are available to cover your funeral.
To gain a better understanding of each product and which one is right for you, we explore their key features below.
You can take out a prepaid funeral plan at any stage of life, regardless of your health.
Simply select a plan that best meets your needs and then choose your preferred payment method.
You can spread the cost with fixed interest-free monthly payments over 12 months, pay in monthly instalments over 2-25 years, or pay up-front.
You may sway towards the funeral plan option if you prefer to have more control over how your investment is spent.
As funds from a funeral plan can only be used for your funeral, (unlike an over 50s plan).
A funeral plan also allows you to arrange your own ceremony instead of leaving this burden on your family.
Lastly, the main advantage of a funeral plan is that it enables you to pay for your funeral by locking in today’s rate.
Cost of funeral plans
The price of a UK funeral has increased dramatically since 2004 and is forecast to continue rising.
The total cost of dying is currently a staggering £9,204, with funerals costing on average £4,271.
As mentioned, a funeral plan allows you to pay for a funeral at today’s rate.
The plan will cover the agreed services and fees for your funeral whether it takes place in 5 or 35 years time.
The tier you choose will determine the cost of your plan. Co-op funerals offer plans from £19.81* a month.
Over 50s plan, (no medical)
Acceptance is guaranteed on an over 50s plan if you’re a UK resident and aged between 50 – 85.
The pay out amount (or sum assured) is usually between £5,000 and £25,000 and is guaranteed to pay out after you pass away.
There are no medical questions during the application, simplifying the process.
The insurer has to rationalise having a lack of medical information by offering a smaller sum assured compared to other policies.
The proceeds from an over 50 plan, although often used to cover a funeral, can be used as your beneficiaries wish.
As a result, over 50 plans offer greater flexibility compared with a funeral plan, (which can only be used to cover a funeral).
Cost of over 50s plan
Over 50s plan premiums are calculated based largely on your age, smoking status and the sum assured.
The premiums remain fixed, so your monthly payments won’t increase.
Over 50s premiums are relatively expensive compared with that of term-based cover offering a similar sum assured.
This is because insurers migrate their risk due to the lack of medical knowledge they have on the policyholder.
Some insurers require premiums to be paid for the rest of your life.
Although, certain over 50s policies no longer require premiums to be paid after a specific age or period of time, (your cover remains).
Life insurance costs from 20p-a-day, however, there are many factors which can influence how much you pay.
Let us compare quotes on your behalf (for free) and help you find your best quote.
|Funeral Plan||Over 50s Plan|
|Pay a fixed sum in advance to cover all the key elements of your funeral||Fixed monthly premiums that never increase|
|Payment is made in one lump sum or by instalments to the plan provider or funeral director||Sum assured is usually between £5,000 and £25,000 and is guaranteed to pay out when you pass away|
|Arrange in advance all aspects of your own funeral, so loved ones don’t have to||Your beneficiaries can make the decision on how the pay out is used|
|Lock-in the price of a funeral at today’s rate; your plan will not be affected by inflation||Write in trust to avoid or minimise inheritance tax|
|Select a funeral plan to suit your budget and the level of service you wish to receive when you pass away||A medical assessment is not required to secure cover. This also makes the application process quick and simple|
|Guaranteed acceptance, regardless of your health or age||Guaranteed acceptance for 50-85 year olds|
|Cancellation flexibility on funeral plans||You could stop paying premiums by age 90|
The waiting period
When you take out an over 50s plan there’s a waiting period (or qualifying period) which lasts 12 or 24 months.
This is a period of time at the beginning of a policy when you’re unable to claim if you pass away of natural causes.
If you do pass away during the waiting period the premiums you’ve paid are returned to your loved ones.
A funeral plan will usually not kick in until 12 months after the start date if you’ve opted to pay by instalments.
If you were to pass away of natural causes during the initial 12 months, the funeral plan will be invalid and funds returned to your beneficiaries.
However, if you were to pass away from accidental death during the first 12 months then your plan is valid and the provider will carry out your funeral as agreed.
A funeral plan and life insurance
Depending on your available budget, it’s possible to take out both a funeral plan and a life insurance policy.
For example, you may want to take out a funeral plan specifically to avoid rising funeral costs and an over 50s plan to provide an inheritance.
Obviously, this would mean paying for two separate policies but would provide you with much greater coverage.
Whole of life insurance
A whole of life insurance is commonly taken out by those in later life, who are in good health.
Like an over 50s plan, a pay out is guaranteed after you pass away. However, with whole of life, you’ll be asked health questions during the application.
Therefore, if you’re over 50 and have a poor medical history, you could find that the premiums are too high or that you’re declined altogether.
With whole of life insurance, as the name suggests, you would be paying premiums for the rest of your life.
However with an over 50s plan it’s likely your premium payments will cease after a certain age, usually from your 90th birthday.
One key benefit of whole of life insurance is that you’re able to secure a much greater sum assured compared with over 50 plans.
This could enable you to cover your funeral, as well as meet other expenses; clear debts, pay off a mortgage or leave an inheritance.
Whilst it’s possible to cancel your over 50s plan at any time, you would lose any funds paid into the policy and would no longer be covered.
Some funeral plans allow you to cancel before the payment plan has ended and all the funds paid in will be refunded to you, excluding a cancellation fee.
It’s important that if you have a funeral plan and have opted to pay by instalments, the monthly payments are kept up to date.
Otherwise, your plan could be cancelled and your funeral won’t be covered.
Terminal illness cover
Over 50s plans come with terminal illness cover as standard.
This means that you would be eligible to claim early, (as long as it wasn’t within the waiting period) if you had a terminal illness and were predicted to pass away within 12 months.
An early pay out could be used to make the rest of your life more comfortable.
For example, adapting your home or hiring a medical carer.
Funeral plan benefit option
Some life insurance providers offer a funeral benefit option as part of an over 50s plan.
You can request this in your plan to ensure your policy pay out goes towards your funeral.
For example, SunLife currently offers a £300 funeral benefit, working with Dignity Funerals.
The funds would go directly to the funeral director, who your family would liaise with to make all the arrangements when the time comes.
Some insurers will even offer a cash contribution towards your funeral costs if you were to choose this option.
However, it’s important to understand all the terms and conditions before making any final decisions.
Paying for your funeral with savings or investments
If you’re one of the 13m UK households who either have no savings or less than £1,500, then you may find it difficult to save for your funeral.
Committing to a monthly funeral plan payment could be more manageable and afford you a saving in the long run.
This is because, otherwise, the amount you would need to save would need to increase in line with the rising funeral costs.
You may already have a nest egg ready to hand over to your family after you’re gone.
However, if you have sufficient savings to cover your funeral then you could pay for a funeral plan upfront.
Not only will you receive all the benefits of a funeral plan, but more importantly you’ll be securing the current price of a funeral.
Although acceptance is guaranteed on either a funeral plan or an over 50 plan, your age could still influence the right policy for you.
You could pay off any outstanding debts, cover funeral costs and leave behind an inheritance to your loved ones.
If you’re over 80, you can only secure an over 50s plan up to the age of 85.
What’s more, you may find that the premiums are too expensive, as you would be paying premiums for a shorter period of time than someone younger.
As a result, depending on what it is you want to protect, a funeral plan may be a better option.
Free gift incentives
You may have seen insurers offering free gift incentives to new customers if you buy direct from them.
Although this can be enticing, it’s normally best in the long-term if you choose the right policy/plan, from the right provider and view the free gift as a bonus.
Over the course of an entire term, the monetary value of a free gift usually ends up being insignificant.
Write in trust over 50 plan
Writing your life insurance in trust means you sign over the pay out to a trustee who’ll handle your estate on your behalf.
The key benefits of doing this include:
- Avoid or minimise 40% inheritance tax, (ensuring more goes to your loved ones)
- Avoid the probate process, (for a quicker pay out)
- Have more control over your policy, (who gets the funds and when)
At Reassured, we offer a free writing in trust service. We can help you complete the paperwork and can explain any industry jargon.
Compare quotes for over 50s
There are many life insurance and funeral care providers offering various policy options, often at very different prices.
Searching through these may not only be daunting but also very time-consuming.
Using an FCA registered broker service, such as Reassured, can relieve you of this mundane task.
We compare quotes on your behalf from leading insurers, finding you the best funeral plan or life policy.
We can also help decipher any jargon and assist with the application process if required.
Our service is not only award-winning but it’s also completely free of charge.
If you’re looking for a funeral plans for over 50s, challenge us today to save you money.