Alternative ways you could make financial provisions for your funeral include:
- Life insurance
- Your estate
- Savings account
1. Life insurance
Life insurance is a type of policy that pays out a cash lump sum to your loved ones when you pass away, in exchange for a monthly premium.
People who are looking to specifically cover their funeral expenses are likely to opt for an over 50s plan or whole of life insurance policy.
Both forms of cover would provide a guaranteed pay out in the event of your death, unlike term-based policies.
However, depending on your personal circumstances and the type of policy you choose, you may not be able to secure enough cover to pay all your funeral related costs.
And, unlike a funeral plan, a life insurance pay out isn’t safeguarded against inflation or rising funeral costs.
If your policy isn’t written in trust, then the pay out may be used for other things, rather than what you intended.
Writing your life insurance in trust means signing your policy over to a trustee who’ll manage the policy pay out on your behalf when you pass away.
- Avoid probate for a faster pay out
- Reduce inheritance tax, (40% on everything over £325,000)
- More control over the distribution of pay out
Reassured can help you write your policy into trust, free of charge.
2. Your estate
Without a funeral plan or life insurance policy in place, your funeral expenses could be covered by your estate (any money, property and possessions you have).
In most cases, your loved ones would need to wait for probate to be granted (when your estate and assets are legally distributed) before they can recover the funds for the funeral.
Probate can take between 6-9 months, sometimes longer, following your passing.
This means the person who’s arranging your funeral would need to pay the upfront cost to the funeral director until probate has passed.
However, if your estate is small and/or you have outstanding debts to pay (which would take priority over funeral costs) then there may not be sufficient funds remaining for them to claim.
With a funeral plan, you can have peace of mind that your key funeral services are paid for in advance and your loves ones won’t be left out of pocket.
3. Savings account
A common way to make financial provisions for your own funeral is to set money aside in a savings account.
The sensible thing to do is to make sure there are sufficient savings in a joint bank account that you share with a close relative.
They can access the funds to help cover your funeral expenses when the time comes if there’re no other finances available.
If you’re the sole account holder, then the person who needs to find the money for your funeral may run into a few roadblocks when trying to access your savings.
For example, some banks won’t release any funds until probate has been granted (as your bank accounts are considered as part of your estate).
Other banks may release the funds sooner, but they’ll ask to see a death certificate and possibly an itemised funeral bill.
When a funeral needs to be arranged within several weeks, your loved ones may have to stump up the money in the meantime, adding more stress to an already difficult time.
- Lock-in your funeral costs
- Give you control over how much is spent on your funeral
- Give you peace of mind that your funeral is already arranged
Prevent your savings from being used to pay for the funeral.
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