Life insurance vs funeral plan

Life insurance Funeral plan
Provides a cash lump sum pay out that loved ones can spend as they see fit Plan funds are paid directly to the funeral director to cover funeral costs
Sum assured (pay out amount) value is variable depending on the policy type and what it is you want to protect Freezes funeral costs at today’s rate (avoid rising costs)
Fixed monthly premiums calculated based on personal factors and policy terms Allows you to make the arrangements for your funeral (removing this burden from loved ones)
Depending on your circumstances, monthly premiums could be cheaper than monthly funeral plan instalments Pay in full, or spread the cost with short and long term payment options
Different policy types to suit different needs Different service levels to suit different budgets
Can be written in trust to protect savings and reduce inheritance tax Guaranteed acceptance regardless of your age or health
Cover from 30p a day with Reassured Plans from £20.38* a month with Reassured


Life insurance and funeral plans are two very different products; varying in many aspects including cost and structure.

However, both products offer a practical solution to putting money aside to help pay for your funeral.

There’s no limit to just one type of cover - a life insurance policy and a funeral plan can be taken out simultaneously to serve different purposes.

But if it’s life insurance vs funeral plan, what’s the right choice for you and your family?

You can use our award-winning, FCA registered broker service (free of charge) to help find the answer.

At Reassured, we compare quotes for life insurance and funeral plans on your behalf, 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 the difference between a funeral plan and life insurance?

As mentioned, there are many differences between a funeral plan and life insurance, but to summarise;

A funeral plan is all your essential funeral services arranged and paid for in advance at today’s price.

Life insurance provides a cash lump sum pay out to your loved ones in the event of your death.


1) A funeral plan covers your funeral costs only, and funds paid into the plan are paid directly to the funeral director when you pass away.

Whereas, with life insurance, a cash lump sum pay out is received by the beneficiaries of the policy and they can decide how proceeds are spent.

Generally, life insurance provides sufficient cover for more than just a basic funeral.

Additional funds could be used to:

  • Cover other death-related costs (total cost of dying is £9,493[1])
  • Clear outstanding debts in your name
  • Provide an inheritance


2) A funeral plan allows you to arrange your own funeral in advance.

Included in the cost of a plan is the support and guidance from a funeral director 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 assistance.


3) Funeral plans allow you to record your funeral wishes - which otherwise family members may not be aware of.

Your wishes are kept on file until they are needed, ensuring that your funeral is planned to your preference.

However, you can still record your funeral wishes without a funeral plan, and have a life insurance policy in place to cover the costs.

This can be done through your will, or by using a ‘record of wishes’ service through a funeral provider.

It just means your loved ones would need to actively plan your funeral when the time comes.


4) Funeral plan prices are fixed so that you know exactly how much you’ll pay in total.

There are also a number of flexible payment options to choose from.

The amount you pay covers all your essential funeral services only.

Life insurance may appear cheaper in the short term, but you could be paying premiums for an indefinite amount of time.

Depending on the policy, the total amount you pay could even exceed the sum assured secured (pay out amount).

Did you know you can freeze your funeral costs with a funeral plan?

The amount you pay for your funeral plan today remains fixed, and the services included in the plan are guaranteed.

This means your funeral could take place in many years to come and there’d be nothing else for your loved ones to pay.

This is a valuable benefit when funeral costs have risen 130% in the last 16 years (and are likely to continue in this way).

Lock-in your funeral costs today by securing your funeral plan through Reassured.

Cost of funerals infographic UK

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 the more suitable option.

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

There are a variety of policy types available; the cover amount and term length is variable depending on what it is 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.

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

At Reassured, we can do exactly this on your behalf – 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
  • 6 or 12 months monthly payments
  • Monthly instalments over 2 – 25 years (plus interest)

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 £20.38 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 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, when you buy a funeral plan the amount you pay will remain the same whether you spread the cost over 25 years or pay in one lump sum.

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

Which 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 lump sum, or by monthly instalments.

Paying over several years can help reduce the monthly cost, but long-term instalment plans from 2 years will incur instalment charges.

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

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

Life insurance to cover funeral costs

Many make the obvious comparison of over 50 life insurance and funeral plans.

This is because over 50 life insurance (or over 50 plans) are one of the most common types of life insurance taken out by those later in life to cover their funeral costs.

The sum assured (pay-out amount) is usually up to £25,000 and acceptance is guaranteed if you’re a UK resident aged 50 – 85.

You won’t need to provide any medical information which makes the application quick and easy.

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

An over 50 life insurance policy 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 your basic funeral costs.

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

What about whole of life insurance?

Similar to an over 50s plan, a whole of life policy 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

Life insurance and funeral plan options for over 80s are the same as for any other applicant.

It’s natural to weigh up your options later in life, as you start to wonder how your loved ones may cope financially when you’re no longer around.

But due to your age, you may encounter slightly higher premiums with any life insurance policy.

If your focus is to ensure that your loved ones can afford your funeral, then a funeral plan may be a more suitable option.

The amount you pay for a plan will be the same as for anyone else, as the prices aren’t variable due to personal factors such as your age.

However, whilst funeral plans are available to customers of all ages, those over 80 won’t be eligible for the long-term instalment plan.

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

Both life insurance and a funeral plan

As mentioned, it’s possible to take out life insurance and a funeral plan simultaneously to serve different purposes – budget allowing.

A funeral plan freezes your funeral costs at today’s price, and the details of your funeral have been planned to your preference.

And then the pay-out from a life insurance policy provides your family with a cash sum to use as they wish.

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 on your behalf or finding you the most suitable funeral plan for your budget - or both (our time is yours).

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

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

Sources:

*£20.38 per month includes a £75 discount only available to Co-op members, based on a 50-year-old purchasing a Simple Funeral Plan at £3,220 after discount with 25 years payment term (total amount payable £6,115.40)

[1] https://www.sunlife.co.uk/siteassets/documents/cost-of-dying/SL-cost-of-dying-report-2020.pdf/

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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!

Mrs M Rushworth

Very professional and reassuring

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

Stephen Davies

very courteous and friendly

very courteous and friendly. Polite professional and empathic.

Stedroy Fenton

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

Piotr Stepien

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Michael Reynolds

Amazing service

Amazing service quick fast and easy and Joey was a star on the phone really help me thanks.

Sera Woolley

I made the right choice and now I feel…

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

glyn

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

Katelia Merritt

I must say Jake took me through every…

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

Allan Green

Very happy and everything explained…

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.

Jenny Berry