Life insurance or funeral plan - Which is best?

Many people choose between over 50 life insurance (an over 50 plan) or a funeral plan to help cover their funeral costs.

An over 50 life insurance policy pays out a cash lump sum to your loved ones when you pass away, whereas a funeral plan allows you to arrange and pay for your chosen funeral services in advance.

In this guide, we explain the key differences between both options to help you decide which of these may be better for you and your family.

At Reassured, we can help you compare over 50 life insurance quotes from leading insurers free of charge. Quotes start from just £5 a month + .

We can also compare quotes for other types of life insurance if you’re not yet 50, such as term and whole of life insurance. However, we’re unable to sell funeral plans.

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

Funeral costs are on the rise in the UK, reaching £4,141 (on average) in 2023 for a basic funeral and £9,658 (on average) for all funeral related costs combined[1].

Planning ahead for this large expense, whether that be with a funeral plan or an over 50 life insurance policy, can help to relieve financial stress for your loved ones when the time comes.

Over 50 planFuneral plan
Pays out a cash lump sum Icon green tick Icon ruby cross
Can help towards the cost of your funeral Icon green tick Icon green tick
Guaranteed acceptance
(age restrictions apply)
Icon green tick Icon green tick
No medical or heath questions Icon green tick Icon green tick
Choice of payment options Icon ruby cross Icon green tick
Option to include funeral benefit and receive a cash contribution Icon green tick Icon ruby cross
CostFrom just £5 a month through ReassuredPrices vary between providers and plans

Does life insurance cover funeral costs?

Yes, life insurance could help to cover your funeral costs when you pass away.

The lump sum pay out from any life insurance policy can be spent at the discretion of the beneficiaries, which means it could help towards funeral expenses if they wish.

Beneficiaries also have the flexibility to spend the money in other ways, for example, on household bills, debts or living costs. Unlike a funeral plan, which can only pay for funeral services.

If you want to take out life insurance to cover your funeral costs specifically, then there’s also the option to take out an over 50 plan with a funeral benefit option included (available through Reassured).

The funeral benefit option is a free benefit that instructs the insurer to assign your pay out directly to a funeral director when you pass way.

Not only does this give you peace of mind that the money will be used as you intended, but it also gives you a discount on your funeral services (for example, with One Family the discount is £300).

We explain the FREE funeral benefit option in more detail later on in this article.

What is over 50 life insurance?

Over 50 life insurance (also known as an over 50 plan) is a type of policy that guarantees a cash pay out to your loved ones when you pass away.

The funds can be used to help cover your funeral expenses or towards anything they wish, for example:

  • Outstanding debts
  • Household bills
  • Day-to-day living costs for a partner
  • An inheritance

Over 50 life insurance is different to other types of life insurance as there are no medical questions during the application process.

The cost of monthly premiums depends on the sum assured (cover amount), your age and smoking status.

You can secure up to £20,000 of cover (depending on your budget and personal circumstances), which could be a helping hand towards your funeral costs.

Over 50 life insurance starts from just 20p-a-day through Reassured, so get in touch to secure our best available quote.

Life insurance vs funeral plan over 50 life insurance

Over 50 life insurance key features:

  • Guarantees acceptance to UK residents aged 50 - 85
  • No medical questions or exam
  • Cash pay out up to £20,000
  • Immediate accidental death cover
  • Guaranteed pay out after specified waiting period has lapsed (usually 12 or 24 months)
  • Free funeral benefit option
  • Available through Reassured from just £5 a month

What is a funeral plan?

A prepaid funeral plan allows you to plan and pay for your key funeral services in advance.

When you pass away, the funds from your policy are paid out directly to your chosen funeral director to carry out your funeral.

You can pay for a plan either in one lump sum or in monthly payments over a set term depending on your budget.

A funeral plan usually includes:

  • Funeral director fees
  • Cremation or burial fees
  • A hearse and coffin

There are a variety of prepaid plans available that offer different packages at varying price points.

You can expect to pay around £1,500 for a very basic plan, up to around £4,500 for a higher level plan.

Reassured doesn’t sell funeral plans, however, we can help arrange various life cover policies that provide a cash pay out which could be used to help cover the cost of your funeral.

Life insurance vs prepaid funeral plans

Funeral plan key features:

  • Choose your funeral services & record your wishes
  • Guaranteed acceptance (age limits vary between providers)
  • No medical questions or exam
  • Prices are usually between £1,500 and £4,500 depending on the type of funeral you want to have
  • Pay in one single payment or in monthly payments

What’s the difference between over 50 life insurance and funeral plans?

Life insurance and funeral plans are two different products which can both allow you to help contribute towards your funeral costs.

Over 50 life insurance provides a cash lump sum pay out after you pass away which isn’t tied to any specific expense, whereas a funeral plan provides a pay out that’s only used to cover your funeral services.

Here are the key differences between an over 50 plan vs funeral plan:

Over 50 planFuneral plan
Pays out a fixed cash lump sum when you pass awayCovers the cost of your chosen funeral services at a fixed price
Funds can be used to help cover your funeral costs or spent in other ways at the discretion of your beneficiariesHas no cash value; funeral plan payments are used only for your funeral when you pass away
A fixed monthly premium must be paid whilst cover is in place (prices are based on your age, smoking status and sum assured). Could be more affordable than a funeral planYou can pay for a plan in full or in monthly instalments (monthly instalments incur additional fees and cost will depend on your age and payment term)
Premium payments must continue until you pass away or until a specified age (depending on the insurer)If paying in monthly instalments, the payments will end when the plan has been paid in full or until you pass away
Waiting period applies (12 or 24 months depending on the insurer) before a claim can be made for the full pay outIf paying in monthly instalments, a waiting period usually applies (12 or 24 months). If you pass away after this period and before the plan has been paid in full, some providers will still pay out the full amount to cover your funeral. Although some providers don’t offer this benefit
Guarantees acceptance to UK residents (min age is 50 and max age tends to be either 80 or 85) and no medical questions are askedGuarantees acceptance to UK residents (min age is usually 18, and sometimes there’s no max age limit) and no medical questions are asked
Can include funeral benefit option (allowing your pay out to go directly to your funeral provider) and a contribution towards your funeral expenses

Life insurance to cover funeral costs: pros and cons

The pros of over 50 life insurance include:

Icon green tick Provides a cash lump sum pay out

The money can be spent on anything your family wish, whether that be helping towards your funeral, unpaid debts or bills, a holiday, a retirement fund, or any other expense.

Icon green tick Could provide more cover than a funeral plan

It’s possible to secure up to £20,000 of over 50s cover depending on your age, smoking status and budget.

With the most expensive funeral plan being valued at around £4,500, you may be able to secure a higher sum assured than this with an over 50s plan to help contribute towards your funeral.

Icon green tick Can include a free funeral benefit option (and cash contribution)

A funeral benefit option (also known as a funeral funding option) can be added to an over 50s plan at no extra cost.

It allows the proceeds of your policy to be paid directly to a funeral provider, instead of to your loved ones, like a funeral plan.

However, the benefit of doing this that you’ll receive a contribution (or discount) towards your funeral from the funeral provider (for example, with One Family the contribution is £300).

Some over 50s life insurance policies automatically include the funeral funding option, while with others you’ll need to opt in.

Icon green tick The application process is short and simple

Applying for over 50 life insurance is quick and easy as you don’t need to answer any medical questions or fill any long forms.

You can also use a broker, such as Reassured, to help you find a suitable policy and provide you with personalised quotes within minutes.

The cons of over 50 life insurance include:

Icon ruby cross If you’re a smoker, your monthly premiums will be more expensive

Smokers will pay more for life insurance than non-smokers. While an over 50s plan doesn’t require details of your medical history, you’ll still need to disclose your smoking status with some policies.

If you smoke cigarettes, vapes or e-cigarettes then this can affect the cost of your premiums and the amount of cover you can secure.

Icon ruby cross Doesn’t guarantee to cover all your funeral costs

While the maximum pay out is £20,000, the amount of cover you can secure (based on your age and smoking status) may not be enough to pay for the total cost of your chosen funeral.

Icon ruby cross You could pay more into a life insurance policy than what’s paid out

Policies that provide a guaranteed pay out, such as 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.

It’s also important to bear in mind that your cover amount is not protected from inflation, which means it could hold less value in the future.

Icon ruby cross Pay out could be subject to 40% inheritance tax

Inheritance tax (IHT) is chargeable on any part of your estate (any money, property and possessions) that’s worth over £325,000.

If your estate is worth over this amount, which includes your life insurance policy, then your loved ones will need to pay the 40% IHT.

However, it’s possible to avoid (or minimise) the tax amount by writing your life insurance policy in trust (available with some policies).

We have written a writing your life insurance in trust guide if you’re curious to learn more about this free option »

Funeral plan to cover funeral costs: pros and cons

The pros of prepaid funeral plans include:

Icon green tick A funeral plan covers your key funeral costs at today’s rate

With a funeral plan, your key funeral services can be paid for in advance and prices are fixed at today’s rate.

According to the SunLife cost of dying report, UK funeral costs have increased in recent years, from £3,953 in 2022 to £4,141 in 2023[1].

Icon green tick You can plan your funeral according to your wishes

One of the key benefits of a funeral plan is that you can choose the type of funeral you want to have and specify your final wishes, which will help your loved ones when the time comes.

Most plans also come with professional support and guidance for each part of the process, as well as support for your family, including free bereavement services.

Icon green tick Funeral plan prices are fixed so that you know exactly how much you’ll pay in total

Typically, you can choose to pay for a plan either in one single payment or in monthly instalments depending on your budget.

Once your plan has been paid in full, the cover will remain in place until the services are required for your funeral.

Icon green tick Doesn’t form part of your estate when you pass away

A funeral plan isn’t considered part of your estate and isn’t subject to 40% inheritance tax, which is helpful to know if your estate is liable.

This because the funds are paid directly to your funeral director, not to your loved ones.

As a result, the money that’s intended for your funeral is used for this purpose and not tangled up in any legal processes after you’re gone.

Cons of funeral plans include:

Icon ruby cross Doesn’t cover all funeral related costs

A funeral plan doesn’t cover the total cost of your funeral, which means there’s likely to be a shortfall for your family to pay.

Certain elements such as flowers, a memorial, embalming or a burial plot won’t be covered in a plan.

Icon ruby cross Monthly payment option incurs additional fees

If you choose to pay by monthly instalments to cover the cost of your plan, then you could end up paying more than what the plan is worth. This is because additional instalment fees apply.

The amount you pay in fees will depend on the provider, as well as your age and the length of the payment term.

Icon ruby cross A funeral plan could be more expensive than life insurance

The more affordable funeral plans start from around £20 a month, whereas over 50 life insurance can start from just £5 a month depending on your personal circumstances and budget.

Also, if you choose to pay for a funeral plan in full, you could be using savings that were reserved to enjoy with your family or for an inheritance.

An over 50s plan could be an easier and less expensive way of setting money aside for your funeral.

Icon ruby cross Planning your own funeral forces you to think about your mortality

Some people simply aren’t ready to think about death or funeral arrangements. It’s also a difficult subject to raise with loved ones, especially if your life expectancy isn’t long.

If planning your own funeral makes you feel uncomfortable, then a funeral plan might not be the right option for you.

Weighing up the cost

Whether it’s over 50 life insurance or a funeral plan, it’s likely that your budget will have an influence on the right option for you.

In many cases, a funeral plan will be more expensive, as you’ll need to cover the full cost straight away or over a set period where additional fees may apply.

There are usually three different ways to pay for a funeral plan:

  1. One lump sum payment
  2. 12 monthly payments (no fees)
  3. Monthly instalments over 2 or more years (up to a maximum age limit which varies between providers. Additional fees apply)

However, with an over 50s plan you pay a fixed monthly premium for an undetermined amount of time until you pass away (or until a certain age, such as 90).

This means the total amount you’ll pay will depend on your age and how long you live. Over 50 life insurance through Reassured ranges from £5 to £75 a month.

The table below shows an example cost of a funeral plan vs an over 50s plan if paying by monthly instalments over 25 years:

Funeral planOver 50 plan
Policyholder age5555
Cover amount£4,210£4,500
Total payable
(over 25 years)
£8,476.45£5,319
Monthly cost£27.93£17.73

The funeral plan information has been taken direct from a leading funeral plan provider’s website and is correct as of 21/03/24

The table below shows an example cost of a funeral plan vs over 50 plan if paying by monthly instalments over 5 years:

Funeral planOver 50 plan
Policyholder age7070
Cover amount£3,485£3,295
Total payable
(over 25 years)
£4,046.98£1,380
Monthly cost£65.80£23.00

The funeral plan information has been taken direct from a leading funeral plan provider’s website and is correct as of 21/03/24

At Reassured, we can’t compare quotes for prepaid funeral plans, but we can compare quotes for over 50 life insurance to help you find an affordable deal.

The table below shows some example premium prices from leading insurers SunLife and One Family. Quotes are based on taking out £5,000 of over 50s cover:

Age SunLife logo OneFamily logo
50£17.23£14.00
55£19.46£17.00
60£21.84£19.00
65£26.25£24.00
70£34.92£34.00
75£49.22£49.00
80£64.22£75.00
85£73.00
(for £4,200 of cover)
N/A

We have written this SunLife over 50 plan review as well as a One Family life insurance review if you’d like to learn more about their policies.

Alternatively, you can use our award-winning and fee-free broker service to get your personalised over 50 plan quotes and secure your perfect policy today.

Contact our UK-based experts to secure your free, no-obligation quotes.

Whole of life insurance vs funeral plan

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 insurance could offer a much higher sum assured (up to £1,000,000 depending on your personal circumstances) which could help towards your funeral costs or to help cover:

  • Outstanding mortgage debt
  • Family living costs
  • Retirement funds for a partner
  • An inheritance

Also, no waiting period applies, so cover is immediate. This makes it one of the more expensive forms of cover.

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

As medical information is required and standard premiums tend to be higher, this policy type may be more suited to those in good health.

Life insurance vs funeral plan whole of life

Key features:

  • Available to applicants aged 18 - 84
  • Provides immediate and lifelong cover
  • Guaranteed cash pay out up to £1,000,000
  • Application requires your medical information
  • Available through Reassured from just £8 a month ±

Compare quotes for over 50s plans as well as whole of life insurance through Reassured.

Over 80 life insurance vs funeral plan

People over 80 can take out over 50 life insurance or a funeral plan, but the option that’s better for you will depend on your specific age and budget.

Funeral plan

With a funeral plan it’s likely that you will need to pay the total cost in one go or over a short payment term due to your age, which makes it an expensive option.

For example, with Golden Charter the maximum payment term for someone in their 80s is 12 months and the monthly payment for their cheapest plan is £144.67[2].

It’s also important to note that the cost of a prepaid funeral is higher than the cost of a funeral today. This is because funeral prices are expected to rise in the future.

As a result, paying for your funeral in advance with a funeral plan when you’re over 80 may not have the same benefits as for someone who is in the 50s or 60s.


Life insurance

Over 50 life insurance could be a more affordable option for someone aged 80 - 85 looking to help cover their funeral costs.

For example, if you take out an over 50s policy through SunLife, the maximum premium you’ll pay depending on your specific age is £74 a month.

While it could be cheaper to take out an over 50s policy in your 80s, it’s also important to bear in the mind that a waiting period applies.

During the waiting period (usually 12 or 24 months) your loved ones won’t be able to claim for the full pay out if you pass away of natural causes.

However, they’ll receive a refund of the premiums you’ve paid.

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

Please note, Reassured doesn’t sell prepaid funeral plans, however we can compare life insurance 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 if your budget allows.

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

And then the pay out from an over 50 plan could provide them with the funds to help cover any additional costs that the funeral plan doesn’t cover or on anything else they wish.

It’s also possible to take out more than one over 50 life insurance policy at the same time to secure a larger cash sum. You can do this with one insurer or multiple insurers.

Compare FREE life insurance quotes

Whether you choose a funeral plan or life insurance policy will depend on your personal circumstances and budget.

On one hand, life insurance can provide more flexibility for your loved ones as they can spend the money how they see fit when the time comes.

They could also benefit from a higher pay out, which could help cover your funeral costs as well as other expenses that may arise after you’re gone.

On the other hand, a funeral plan could be more suitable if you want to have peace of mind that your chosen funeral services are guaranteed and that your arrangements are taken care of.

The cost of both options will vary based on many factors, which is why it’s important to compare quotes to help you find the better deal.

At Reassured, we can’t compare quotes for funeral plans but we can compare life insurance and over 50 plans quotes from a range of leading insurers.

One of our experts can provide all the information you need to help you decide if life insurance could be the right option for you.

Get in touch for your free, no-obligation quotes and protect your loved ones today.

Sources:

[1] https://www.sunlife.co.uk/funeral-costs/

[2] https://www.goldencharter.co.uk/funeral-plans/basic-plan/

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