Life Insurance vs Funeral Plan [Complete 2026 Guide]

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Life insurance vs funeral plan

Which is better, life insurance or funeral plan?
Comparison at a glance
Does life insurance cover funeral costs?
What is over 50 life insurance?
What is a funeral plan?
What’s the difference between over 50s life insurance and funeral plans?
Life insurance to cover funeral costs: pros and cons
Funeral plan to cover funeral costs: pros and cons
Weighing up the cost
Whole of life insurance vs funeral plan
Should you get life insurance or a funeral plan?
FAQs

Which is better, life insurance or funeral plan? [Guide summary]

Over 50s life insurance and funeral plans are both popular options for helping to cover funeral costs, but each has its own pros and cons. The option that’s right for you will depend on your personal circumstances
Over 50s life insurance provides lifelong cover and pays out a cash lump sum when you pass away, which could help towards funeral expenses
A funeral plan covers specific funeral services and may be suitable if you’d like to arrange and pay for your funeral in advance
You could take out both products at the same time to provide financial support in different ways, if your budget allows
Compare over 50s life insurance through a broker, such as Reassured, to find affordable quotes. We’re not able to offer funeral plans.

Comparison at a glance

	Over 50 plan	Funeral plan
Pays out a cash lump sum when you pass away
Specifically designed to cover funeral services
Guaranteed acceptance (no medical questions, age restrictions may apply)
Full cover starts straight away	(12 or 24 month waiting period before full cover starts)	(if paid in full)
Choice of payment options
Regulated by the Financial Conduct Authority (FCA)
Cost	From just £5 a month through Reassured⁺ – secure up to £20,000 of cover depending on your age, smoking status & cover amount	From £1,500 to £5,000 depending on the type of funeral. Monthly payment options are available.

Compare over 50s life insurance quotes >

In the UK, a traditional funeral now costs over £4,500, and prices are continuing to rise^[1].

Therefore, making financial provisions for your funeral could be important if you’re worried about the impact this cost may have on your family.

In this guide, we explain the key differences between over 50s life insurance and funeral plans, and the pros and cons of each, to help you decide if either option is right for you.

Does life insurance cover funeral costs?

Yes, life insurance can help cover funeral costs by paying out a cash lump to your family when you pass away.

The lump sum could also be used for other costs, such as outstanding debts, everyday living costs or household bills, if your family chooses.

What is over 50 life insurance?

Over 50s life insurance (also known as an over 50s plan) is a type of whole of life policy designed for people aged over 50.

It pays out a lump sum when you pass away which could be used to help cover a variety of costs, such as:

End of life expenses (including funeral costs)
Outstanding debts
Household bills
Day-to-day living costs for a partner
An inheritance

Life insurance for over 50s is different to other types of life insurance as there are no medical questions during the application process and acceptance is guaranteed if you’re a UK resident aged 50 – 80 (or up to 85 with some insurers).

Over 50s life insurance with free funeral benefit option

Some policies include a free feature called the funeral benefit option.

This is an optional extra that tells the insurer to pay the lump sum to a nominated funeral provider when you pass away, rather than to your loved ones, ensuring that the money is used to cover the cost of your funeral.

If you choose to include the funeral benefit option, you may also be eligible to receive a contribution to help towards your funeral costs. Contributions can be up to £300 depending on the insurer.

Compare Over 50 Life Insurance Quotes »

What is a funeral plan?

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

When you pass away, the funds from the plan are paid out directly to the funeral provider to cover the chosen services.

A funeral plan usually covers:

Funeral director services
Cremation or burial fees
A hearse and coffin

There are a variety of prepaid plans available on the market to suit different requirements and budgets.

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

The main difference is that over 50s life insurance pays a cash lump sum to your loved ones when you pass away, whereas a funeral plan only pays for agreed funeral services arranged with a provider in advance.

Understanding the key differences between an over 50s plan and a funeral plan can help you decide which option is better for you.

Here’s how the products compare:

Over 50 plan	Funeral plan
Pays out a fixed cash lump sum	Covers the cost of your chosen funeral services at a fixed price
Requires fixed monthly premiums for the rest of your life, or until a set age, depending on the insurer	Requires upfront payment or you can spread the cost in monthly instalments (fees may apply). A minimum deposit may be required.
Cost is dependent on your age, smoking status (with some insurers) and cover amount Most insurers have a maximum premium limit of £75 a month	Prices start from around £1,500 for basic cremation plans and up to £5,000 for comprehensive plans. The overall cost depends on the type of plan and payment option you choose.
Pay out is guaranteed if you pass away after the ‘waiting period’ (this is usually a 12 or 24 month period)	Guarantees to cover your chosen funeral services once the plan is paid in full. Some plans still guarantee to cover the cost of your funeral if you pass away before finishing your payments and after a ‘waiting period’ (typically 12 or 24 months)
Available to UK residents aged 50 - 85	Available to UK residents aged 18 and over. No maximum age limit with most providers

Life insurance to cover funeral costs: pros and cons

The pros of over 50s life insurance include:

Pay out is flexible

The money can be used to help cover key funeral costs, as well as associated costs that a funeral plan doesn’t usually cover, such as flowers, a memorial or burial plot. It could also extend to other expenses, like paying off unpaid debts, bills or contributing towards retirement funds.

Low monthly premiums

Over 50s life insurance is designed to be affordable. Most insurers offer cover from as little as £5 a month, up to a maximum of £75 or £100 a month. It’s possible to get the amount of cover you need for a price that’s within your budget.

Secure up to £20,000 of cover (depending on your personal circumstances)

An over 50s plan may offer a higher level of cover compared to a funeral plan. This means it could offer better overall value for money if you’re also paying low monthly premiums. However, the amount of cover available and the cost will vary between providers.

Free funeral benefit option + cash contribution

Many over 50s providers offer a free funeral benefit option (also known as a funeral funding option) that can be added to your policy at no extra cost.

This means the proceeds are paid directly to a funeral provider, rather than to your loved ones, in a similar way to a funeral plan.

One potential benefit of using this option is that some providers offer an additional contribution towards your funeral (typically up to £300) if you opt in.

Some over 50s policies include the funeral funding option as standard, while with others you may need to request it as an additional feature.

Free health & wellbeing services

Life insurance policies, including over 50s plans, often include additional benefits and incentives that you can’t get when taking out a funeral plan.

For example, many insurers offer free access to health and wellbeing services for policyholders and their families, such as professional support and advice for those living with a serious illness, mental health condition or disability.

The cons of over 50 life insurance include:

Your smoking status may affect the cost of your premiums

Smokers may pay more for life insurance than non-smokers. While an over 50s plan doesn’t require details of your medical history, you may still need to disclose your smoking status which could affect the cost of your monthly premium.

Pay out may not cover the total cost of your funeral

While it’s possible to secure up to £20,000 of cover with some insurers, the amount you can apply for depends on your age and whether you smoke. This means the level of cover available may not be enough to cover the full cost of a funeral.

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

Policies that provide whole of life cover, such as an over 50s plan, may 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 to your loved ones.

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

Pay out could be subject to 40% inheritance tax (unless the policy is written in trust)

Inheritance tax (IHT) is chargeable on the part of your estate that’s worth over £325,000. This includes life insurance, savings, possessions and property.

If the total value of your estate exceeds this amount, then you loved ones may need to pay up to 40% inheritance tax on the life insurance pay out, which means less money to help towards your funeral expenses.

However, it’s possible to avoid (or minimise) the tax bill and ensure your loved ones receive the full amount quicker 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:

Covers your key funeral costs at today’s rate

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

According to the SunLife cost of dying report, the average cost of a traditional attended funeral has increased by 146% since 2004.

Having a funeral plan in place could help protect loved ones from higher prices in the future.

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’d like and record your final wishes.

Most plans come with professional support and guidance on all aspects of your funeral, as well as support for your family, such as free bereavement services.

Fixed prices

You can decide which funeral plan is best for you by considering the upfront cost and available payment options.

Whether you choose to pay in one single payment or by monthly instalments, the cost of the plan is fixed regardless of when it’s used in the future.

This means you could take out a plan early and have peace of mind that you won’t ever need to pay more than what’s been agreed.

Guaranteed funeral services

Some providers will guarantee to cover your chosen funeral services if you pay by monthly instalments but pass away from an accident before fully paying off the plan, or if you pass away from natural causes after a certain period, such as 12 or 24 months.

In this case, the provider won’t request the remaining balance from your loved ones.

Usually exempt from inheritance tax (IHT)

Funeral plans are often dealt with separately from an estate as the money goes directly to a funeral provider after death.

This means that the value of a plan is usually not included in any tax calculations and may not get tangled up in legal processes before becoming available to cover your funeral.

Cons of funeral plans include:

May not cover all funeral related costs

Funeral plans are designed to cover essential funeral services, but they don’t always cover everything. As a result, your family may need to cover some costs when the time comes.

Items that are not typically included in a standard plan include flowers, music, memorials or headstones, embalming, and burial plots.

In addition, if you pass away before fully paying off the plan, your loved ones may need to pay the remaining balance for the agreed funeral services to go ahead, depending on the provider’s terms.

Monthly payment options may incur additional fees

If you choose to spread the cost through monthly instalments over an extended period, extra instalment fees may apply.

This means the total amount due to be paid could be higher than the cost of the eventual funeral.

Before choosing this option, it's important to check the total amount payable and see how the cost breaks down.

Making arrangements in advance won’t suit everyone

Some people simply aren’t ready to think about death or funeral arrangements, and it’s not always easy to approach this subject with loved ones.

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

Weighing up the cost

Whether you choose over 50s life insurance or a funeral plan, weighing up the cost can help determine which option is best for you.

However, it can be difficult to compare the costs like for like, as several factors can affect the monthly amount you pay, including your age, level of cover, payment terms and provider.

Funeral plan cost

Funeral plans could be more expensive overall, as you are essentially paying for the full cost of a funeral in advance, either as a lump sum or over a fixed payment term. Additional instalment fees may also apply if you choose a long term payment method. However, the benefit is that once the plan is paid off, there’d be no further payments to make for as long as you live.

Over 50s life insurance cost

As over 50s life insurance lasts for the rest of your life, it requires fixed monthly premium payments for an indefinite period - either until you pass away or until you reach a specified age (such as 90, depending on the provider). This means the total amount you pay will depend on how long the policy lasts and your age when you take it out. Although premiums tend to start from as low as £5 a month.

The table below shows how monthly costs may compare between a funeral plan vs over 50s life insurance.

The pricing is based on a non-smoker taking out both products with equivalent cover amounts and paying over 24 years. It’s important to consider that the over 50s plan payments could continue beyond 24 years depending on how long the policyholder lives.

	Funeral plan (leading provider)	Over 50 plan (OneFamily)
Policyholder age	55	55
Cover amount	£3,975	£4,288
Deposit	£99.00	N/A
Total payable (over 24 years)	£7,160.06	£4,032
Monthly cost	£24.52	£14.00

The table below shows how monthly costs may compare between a funeral plan vs over 50s life insurance for a non-smoker paying over 5 years.

	Funeral plan	Over 50 plan (OneFamily)
Policyholder age at the start of the plan	70	70
Cover amount	£3,975	£4,001
Deposit	£99.00	N/A
Total payable (over 5 years)	£5,313.49	£1,680
Monthly cost	£48.28	£28.00

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 compares example premium prices from leading insurers SunLife and One Family. Quotes are based on a non-smoker taking out £5,000 of cover:

Age
50	£17.41	£15.00
55	£20.16	£18.00
60	£22.37	£20.00
65	£27.41	£25.00
70	£35.96	£35.00
75	£50.37	£51.00
80	£69.08	£75.00

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 50s plan quotes and secure your perfect policy today.

Compare Free Over 50 Life Insurance Quotes »

Whole of life insurance vs funeral plan

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

However, with whole of life insurance you may be able to secure a higher amount of cover compared to an over 50s plan or funeral plan.

The funds could help towards a range of expenses:

Funeral expenses
Outstanding mortgage debt
Family living costs
Retirement funds for a partner
An inheritance or helping to pay an inheritance tax bill.

Monthly premiums are determined by your age, health, lifestyle and policy terms.

As medical information is required and premiums tend to be higher for those with pre-existing conditions, this policy may be more suited to those in good health.

Should you get life insurance or a funeral plan?

Whether a funeral plan or life insurance policy is better for you 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.

In contrast, a funeral plan could be more appropriate if your main priority is to arrange your funeral according to your wishes and cover the cost in advance, reducing the financial and practical burden on your family.

The cost of both options will vary depending on many factors such as your age, the level of cover or services you choose, and the provider. For this reason, taking time to compare quotes and understand what’s included can help you find the option that best meets your needs.

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

A friendly expert can provide all the information you need and help answer your questions so you can make a fully informed decision.

Make the most of our award-winning comparison service today to arrange the right policy for you.

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FAQs

Which is cheaper, life insurance or funeral plan?

Whether life insurance or a funeral plan is cheaper will vary from person to person, depending on age, health and lifestyle factors.

Generally, over 50s life insurance has lower monthly premiums than a funeral plan.

Policies can start from around £5 per month, whereas funeral plan instalments are typically higher because you're paying towards the full cost of your funeral over a fixed period.

Getting personalised quotes for over 50s life insurance and funeral plans can help you understand which option is cheaper for you.

Should I get life insurance over 80 or a funeral plan?

People over 80 can take out over 50s 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, you may need to pay the total cost upfront or over a shorter payment term, depending on your age and the provider’s terms.

Although funeral prices are expected to rise over time, taking out a funeral plan when you’re over 80 may offer fewer long-term savings compared with someone who takes one out in their 50s or 60s.

Life insurance

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

For example, if you take out a 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 life insurance than a funeral plan in your 80s, it’s important to consider that cover doesn’t start straight away.

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

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

Can you have life insurance and a funeral plan?

Yes, it’s possible to take out life insurance and a funeral plan simultaneously, if this fits your budget.

Having multiple forms of financial protection can help your family better manage different costs when you’re no longer around.