Taking out life insurance and a funeral plan simultaneously can ensure all costs associated with your funeral are covered, whilst also providing your loved ones with extra financial security.
Commonly, people take out a funeral plan when they're either too old or too ill to be accepted for traditional life insurance.
But life insurance and funeral plans actually provide different benefits, suggesting it may be more beneficial to have both in place rather than opting for one or the other.
Funeral plans allow you to lock-in your funeral at today’s prices.
This can be extremely beneficial given the fact that the average cost of a funeral has risen 128% over the past 16 years.
This increase shows no signs of slowing down either and it's expected that the cost of the average funeral will continue to rise.
In contrast, life insurance provides your loved ones with a cash lump sum pay out.
Whilst this lump sum may seem significant at the time of application, once increased living costs and inflation are factored in, it's real terms value could be much less.
One important factor to consider is that most funeral plans cover the cost of funeral director services but not the total cost of third-party services.
Third-party services include a minister or celebrant to hold the ceremony, doctors to sign the medical certificate and the cemetery or crematorium to carry out the burial or cremation.
Some plans provide a contribution to third-party costs but this can’t guarantee to cover the total cost when the time comes. This would leave your loved ones to cover the remainder of the bill.
Therefore, having in place both life insurance and a funeral plan will cover the funeral director costs, whilst locking in today's prices and provide a lump sum large enough to cover all required third-party fees.
If you require a more comprehensive summary on the merits of life insurance vs funeral plan, see this in-depth article »