Should you choose a prepaid funeral plan to protect your…
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), but funeral plans are a growing market with more than 1.5 million people protected to date.
A funeral plan is designed to cover the cost of your key funeral services, whereas life insurance provides a cash pay out if you pass away during the policy term.
Reassured has written this life insurance vs funeral plan guide to help you decide which is the better option for you and your family.
Our award-winning broker service can provide you with free, no-obligation life insurance quotes.
Alternatively, we can help you arrange a SunLife Guaranteed Funeral Plan, which is a type of funeral cover.
This is different to the funeral plans discussed throughout this article because it comes in the form of an insurance policy, rather than via a contractual agreement with a funeral provider.
Continue reading as we provide all the information you need to make a fully informed decision on life insurance vs funeral plans...
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.
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 against any future price increases.
The SunLife Guaranteed Funeral Plan
As mentioned, the SunLife Guaranteed Funeral Plan is different to traditional funeral plans that we outline in this article.
Reassured can’t compare quotes for traditional funeral plans, but we can provide quotes for the SunLife Guaranteed Funeral Plan.
This is a type of insurance policy which guarantees to pay out for your chosen funeral services after two years.
There are two different levels of cover to choose from, with prices beginning from just £19.18 ^ a month.
Get in touch with our dedicated funeral cover experts to secure your free, personalised quotes.
As mentioned, life insurance provides a cash lump sum pay out after you pass away, whereas a funeral plan is specifically designed to cover the cost of your funeral.
Here are the key differences between life insurance and funeral plans:
|Life insurance||Funeral plan|
|Pays out a cash lump sum if you pass away during the term of the policy||Guarantees to cover the cost of 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|
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 offer a more affordable monthly cost.
Premiums could start from just £5 per month - less than the cost of a few takeaway coffees a month.
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 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:
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.
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 compare free life insurance quotes from a panel of top UK insurers, allowing you to find the cheapest possible premiums.
Contact our award-winning team today to secure your quotes.
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.
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 £20,000 (maximum limit varies between insurers).
How much you can secure depends on your age (and sometimes your smoking status), and acceptance is guaranteed if you’re within the specified age bracket.
Premiums are calculated based on your age, the sum assured and sometimes your smoking status.
An over 50s plan remains in place for the rest of your life, which means a pay-out is guaranteed when you pass away.
Insurers offset the risk to them by implementing a waiting period from the start of the policy.
This is usually the first 12 or 24 months during which a claim can’t be made if you were to pass away naturally.
|Over 50 plan||Funeral plan|
|Guarantees a cash lump sum pay out when you pass away|
|Guarantees to cover your key funeral costs|
|Guaranteed acceptance (age restrictions apply)|
|No medical or heath questions|
|Choice of payment options|
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. This makes it one of the more expensive forms of cover.
Premiums are calculated based on your age, health, smoking status 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.
Compare quotes for over 50s plans as well as whole of life insurance through Reassured.
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.
However, as the cost of a funeral plan takes into account that funeral prices may increase in the future, you may find that paying for your funeral in advance doesn’t have the same benefits as for someone who is younger.
Please note, the SunLife Guaranteed Funeral Plan which can be arranged through Reassured is not available to applicants aged over 80.
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.
As mentioned, Reassured can help you arrange a type of funeral cover provided by SunLife.
This is called the SunLife Guaranteed Funeral Plan.
We can also compare multiple quotes for life insurance from a panel of top UK insurers.
One way to find out which option is best for you is to compare quotes for both.
We have a dedicated team of life insurance and funeral cover experts, on hand to provide you with all the information you need to make a fully informed decision.
Get in touch today to start the journey to protecting your loved ones.
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Yes very pleased with my choice very helpful easy to understand and very pleasant transaction all good!Mrs M Rushworth
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