Is it better to have life insurance or a funeral plan?

Neither product is better than the other, as life insurance and funeral plans are vastly different products each with their own benefits.

More people in the UK have life insurance (around 23 million)[1], but funeral plans are a growing market with more than 1.5 million people protected to date[2].

A funeral plan guarantees your key funeral services, whereas life insurance provides a cash pay out if you pass away during the policy term.

At Reassured, we can help you determine which may be the better option for you and your family.

We can also compare quotes for life insurance or funeral plans, before securing you the best possible deal.

Continue reading as we provide all the information you need to make a fully informed decision on life insurance vs funeral plans...

What is life insurance?

Life insurance is a form of cover that pays out a cash lump sum in the event of your death.

It can be used by your loved ones to cover funeral costs, pay off debts, clear the mortgage or spend as an inheritance.

There are different types of life insurance policies to suit different needs. Over 50s plans and whole of life are the most popular for covering funeral expenses as loved ones are guaranteed a pay out when you pass away.

How much you can secure, and the cost of your life insurance premiums will depend on the type of policy you choose and your personal circumstances.

Life insurance starts from just 20p-a-day through Reassured, so get in touch to secure your best available quote.

What is a funeral plan?

A prepaid funeral plan allows you to pay a fixed sum in advance for your key funeral services.

It’s an agreement with a funeral plan provider, such as Co-op, to carry out your funeral when the time comes.

A funeral plan gives you the opportunity to choose the type of funeral you want to have, and to decide how much is spent.

It protects loved ones from the difficult task of planning your funeral and helps to safeguard from ever-increasing funeral costs (+128% since 2004)[3].

Funeral plans arranged through Reassured cost from as little as £19.11* a month - get your free personalised quote today.

What’s the difference between life insurance and funeral plans?

As mentioned, life insurance provides a cash lump sum pay out after you pass away, whereas a funeral plan is specifically designed to cover your funeral.


Here are the main differences between the two products:

Life insurance Funeral plan
Pays out a cash lump sum if you pass away during the term of the policy Guarantees to cover your funeral services at today’s rate
Provides financial support for loved ones, and can be spent how they see fit Has no cash value; funeral plan payments are used only for your funeral
A monthly premium must be paid whilst cover is in place Choice of payment options - pay in full or spread the cost in monthly instalments
Premium payments continue until the policy expires or until you pass away (depending on the policy) Payments end when the funeral plan has been paid in full
Requires underwriting to determine whether you can secure cover and how much it will cost Guaranteed acceptance and no medical questions
Different policy types to suit different needs and budgets Choice of plans to suit different needs and budgets
Cover from 20p-a-day with Reassured Plans from £19.11* a month with Reassured

Life insurance to cover funeral costs: pros and cons

The pros of life insurance include:

  • Life insurance provides a cash lump sum pay out
    The money can be spent however your family wish, whether that be for your funeral or for other expenses.
  • Life insurance provides comprehensive financial protection
    Life insurance is designed to protect your family from financial hardship if you were no longer around to support them.

    Depending on your personal circumstances and the type of policy you choose, the pay out is likely to be higher than just what’s required for your funeral.
  • You can add additional cover e.g. critical illness cover (CIC)
    Life insurance can be layered with other types of protection, such as terminal illness cover (comes as standard with all term policies through Reassured) or critical illness cover (at an additional cost).

    Some policies also have additional benefit options that can be added to the policy if you choose, to help you make the most of the cover (but will cost extra). Some of these include waiver of premium, special events option (guaranteed insurability), and separation benefit.

The cons of life insurance include:

  • Not everyone is eligible and may be expensive for some people
    It may be difficult for some people to secure affordable cover (or secure cover at all) due to their age and/or health. 

    Most insurers have an upper age limit, typically 80 or 85. Also, applicants with certain pre-existing conditions may be considered too risky to cover or may be charged higher premiums.

    We have written an in-depth life insurance with pre-existing conditions article if you require additional information »
  • You could pay more into a life insurance policy than what’s paid out
    Policies that provide a guaranteed pay out, such as whole of life or over 50s cover, require premium payments up until you pass away.

    This means, depending on how long you live, you could end up paying more into the policy than what’s paid out.

    Also, with term-based policies, you could pay in but not receive a pay out at all if you outlive the policy term.

Funeral plan to cover funeral costs: pros and cons

The pros of funeral plans include:

  • A funeral plan guarantees your key funeral costs (at today’s rate)
    Funeral costs have risen 128% since 2004, which is a rate much faster than inflation.

    With a funeral plan, you’ll have peace of mind that your key funeral services are paid for in advance and guaranteed at today’s price, avoiding future price hikes and protecting loved ones from the large expense
  • There are no medical or health questions
    Funeral plans guarantee acceptance. This means even if you have a health problem or have a pre-existing medical condition, you can still get a plan (and at the same price as any other applicant)
  • A funeral plan allows you to plan your funeral (your way)
    Included in the cost of a plan is the support and guidance from a professional funeral planner, for every step of the way - for you, and for your loved ones when the time comes.

    Funeral plans arranged through Reassured also come with free bereavement advice for loved ones
  • Funeral plan prices are fixed so that you know exactly how much you’ll pay in total
    You can choose to pay in full for immediate cover or to spread the cost in monthly payments. The payments will end when your funeral has been paid in full and your plan will remain in place until your services are needed

Cons of funeral plans include:

  • A funeral plan could be the more expensive option
    In the short term, a funeral plan could work out more expensive than life insurance (especially if you’re in good health) and the pay out is only as much as you have paid in.

    Although depending on the life insurance policy you choose and the level of cover you have, a pay out may not guarantee all your funeral costs, unlike a funeral plan
  • A funeral plan forces you to think about your mortality
    It’s a difficult subject, especially one to discuss with family and friends. Planning your own send-off may feel uncomfortable in the short term - but can give you peace of mind in the long term
Cost of funerals infographic desktop

Weighing up the cost

Whether it’s life insurance or a funeral plan, it’s likely your budget will have an influence on the right option for you.

On one hand, if you're in good health, then life insurance may be in favour.

Premiums could start from just £6 per month - less than the cost of a couple of Starbucks coffees.

On the other hand, if you’re elderly, smoke and/or have a poor medical history you may find it more difficult to secure affordable cover (or cover at all).

In this case, a funeral plan may be a more suitable option.

Life insurance premiums are calculated based on personal factors, such as your age and health, as well as the policy terms.

There are a variety of policy types available; the cover amount and term length can vary depending on what you wish to protect.

The higher the sum assured (cover amount) and the longer the term, the more expensive premiums will be.

Essentially, the cost of life insurance varies for every individual – but also varies between insurers.

This is why it’s important to compare multiple quotes from a variety of insurers.

At Reassured, we can do exactly this - saving you valuable time and money.

Funeral plans range in price and level of service.

Usually starting at around £3,000 for a traditional funeral.

Most come with three different payment options:

  • One lump sum payment
  • 12 monthly payments
  • Monthly instalments over 2 - 25 years (charges apply and plans must be paid in full by 80th birthday)

Funeral plans also vary in price between providers.

Therefore, it’s sensible to weigh up your options and determine which provides the best value for money.

Funeral plans arranged through us start from just £19.11 per month.

As mentioned, the cost of both life insurance and funeral plans vary depending on the provider.

You may wonder exactly what you can get for your money, and how much your loved ones could receive.

One of the fastest ways to find out is by using a life insurance broker, such as Reassured.

We can help you determine which are the best options available to you within your budget.

Contact our award-winning team today to secure your quotes for either life insurance or funeral plan.

Long term cost to consider

As mentioned, the cost of a funeral plan remains fixed at today’s price and payments will end once the plan has been paid in full.

However, with an over 50s plan or a whole of life policy, you’ll continue to pay monthly premiums until you pass away.

This means, depending on how long you live, it’s possible that you could pay more in than is paid out.


Funeral plans can be paid in one single payment, or by monthly instalments.

Paying over several years can help reduce the monthly cost, but long-term instalment plans from 12 months will incur instalment charges.

So, whilst the cost of the plan remains the same, for the convenience of spreading the cost, you’d pay more than its overall value.

However, many opt for this payment choice as it offers an affordable solution to covering the expense.

Over 50 plan vs funeral plan

An over 50s plan is a type of life insurance policy designed for people aged between 50 and 85, who want to leave behind some money to help cover their funeral costs.

Unlike a funeral plan, the pay out is a cash sum that is paid directly to loved ones after you pass away.

The pay out amount is usually between £5,000 and £25,000 (maximum limit varies between insurers).

How much you can secure depends on your age, rather than any health or lifestyle factors, and acceptance is guaranteed if you’re within the specified age bracket.

Premiums are calculated based on your age and the terms of the policy.

An over 50s plan remains in place for the rest of your life, which means a pay-out is guaranteed when you pass away.

Sounds ideal at first glance - particularly if you suffer from a pre-existing health condition.

However, there are some pitfalls to this type of cover.

Insurers offset any risk by charging higher premiums and implementing a waiting period.

The waiting period is usually 12 or 24 months from the start of the policy during which natural death is not covered.

It’s also possible that with a smaller sum assured available, the amount you’re able to secure may only be sufficient to cover basic funeral costs.

In this case, you may wish to look more closely at the benefits of a funeral plan instead.

  Over 50 plan Funeral plan
Lump sum cash pay out when you pass away List icon Cross
Guarantees to cover your key funeral costs Cross List icon
Guaranteed acceptance List icon List icon
No medical or heath questions List icon List icon
Choice of payment options Cross List icon
Protected against rising funeral costs Cross List icon

What about whole of life insurance?

Similar to an over 50s plan, whole of life insurance guarantees a cash lump sum pay out to loved ones when you pass away.

The difference is that whole of life offers a much higher sum assured (up to £1,000,000) which could go far beyond paying for your funeral.

Also, no waiting period applies, so cover is immediate.

Premiums are calculated based on your age, health, smoking status and the terms of the policy.

As medical information is required, this policy type may be more suited to those in good health.

Over 80 life insurance vs funeral plan

People over 80 can take out life insurance or a funeral plan, but the option that’s better for you will depend on your specific age and budget.

Life insurance gets more expensive the older you are, and premiums can be sky-high for people over 80 with poor health.

Also, for the older applicant, the type or level of cover you can secure may not be sufficient for your needs.

We have written a dedicated over 80 life insurance article if you require more information »

A funeral plan may be the more suitable option because you can pay it in full today and have immediate cover for all your key funeral services.

Contact Reassured today for your free life insurance and funeral plan quotes.

Can you have life insurance and a funeral plan?

Yes, it’s certainly possible to take out life insurance and a funeral plan simultaneously to serve different purposes - budget allowing.

A funeral plan can remove a lot of worry for your family by ensuring your funeral services are paid for in advance and that arrangements have been taken care of.

Then the cash pay out from a life insurance policy can provide your family with some additional financial support, whether that’s to maintain their current standard of living or to enjoy as an inheritance.

Discover your options by getting in touch with our award-winning team today.

So, what’s best life insurance or funeral plan?

Still not decided? Not a problem, at Reassured we can help you make an informed decision by providing you with all the information you need.

Whether that be comparing multiple life insurance quotes or finding you the most suitable funeral plan for your budget - or both (our time is yours).

Also, our award-winning service is completely free of charge for you to use.

Get in touch today to start the journey to protecting your loved ones.

Sources:

*£19.11 per month pricing includes a £75 discount only available to Co-operative members and is based on a 50-year-old purchasing a Co-operative Simple Funeral Plan at £3,020 over the maximum term available of 25 years (total amount repayable £5,733.40) as of 1st March 2021

[1] https://www.finder.com/uk/life-insurance-statistics

[2] https://funeralplanningauthority.co.uk/about-us/statistics/

[3] SunLife (2021), Cost of Dying Report, sunlife.co.uk/costofdying2021

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Our Providers

At Reassured, we will provide you with quotes from Co-op Funeral Care.

All of the funeral plans we provide are fully regulated by the Funeral Planning Authority (FPA) ensuring you and your money are protected.

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Very easy to understand and very quick

Yes very pleased with my choice very helpful easy to understand and very pleasant transaction all good!

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Very professional and reassuring. Life insurance sorted in about 10 minutes.

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Another happy customer I am. They are very professional and kind. Fully communicative. I recommend.

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I made the right choice and now I feel relieved that I did.

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Really genuine kind and compassionate team with great knowledge and friendly approach highly recommend them!

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I must say Jake took me through every step and was brilliant, recommend them anytime.

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Very happy and everything explained well, so glad a took the time to take the call, normally I would say I'm busy. But compared to other company's we save so much more money.

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