What is the one thing that we all have in common yet the majority of us still bury (no pun intended) our heads in the sand and do nothing about?
The thing that causes many families to turn to credit cards as the only way to meet the costs?
The thing that could be so much easier if we just thought about it in advance?
Yes you’ve got it – we are all going to die.
We go through our lives insuring our families against all types of risk however when it comes to funeral insurance, many of us don’t even give it a second thought. Well perhaps it’s about time that changed.
Dying is an expensive business
The average cost of a funeral has increased by around 7% every year for the last decade and is now more than 3,400. If this pattern continues, prices could easily exceed 6,000 in just 10 years time which understandably will cause financial hardship for many families.
Thinking about these costs in advance and putting some form of funeral insurance in place (like the ones on this site, for instance) could relieve your family of that pressure, not to mention saving them the additional stress of having to make all the arrangements when the time comes.
What is funeral insurance?
When people talk about funeral insurance or a way to pay for funeral costs, they are usually either referring to a Prepaid Funeral Plan or Over 50s Life Insurance.
A prepaid funeral plan gives you the opportunity to pay for funeral costs in advance at today’s prices, which could be quite a saving considering the way prices are consistently rising.
An over 50s life insurance plan pays out a cash sum when you die that can be used to help towards the cost of a funeral, so may be an option if you prefer to leave some money to your family.
Which is the right form of funeral insurance for you?
This really depends on your needs and your budget.
If you want to plan everything yourself, then a funeral plan may be the most suitable option. You should expect to pay between 3,000 and 4,000 for a plan that guarantees to cover the Funeral Director’s costs, includes an allowance for third party costs (disbursements – which includes Ministers, Doctors, and cremation or burial fees) and gives you the option to have a limousine for family members.
If you prefer to spread the cost, you can decide between instalments over 1, 3 and 5 years, with monthly payments from 50 to over 300 depending on the term and the level of service you choose.
Alternatively some funeral plan providers now offer fixed monthly instalments with lower monthly premiums starting from around 23 that are dependent on your age and are payable either until you die or until your 90th birthday.
With the instalment option, you are covered for your services once you have completed your payments. With the fixed monthly payment option you are covered after an initial period of between 6 months and 2 years, depending on the provider.
Over 50s life insurance starts from around 7 a month with premiums again payable either for life or until you are 90. As long as you are between the ages of 50 and 80 and live in the UK you are guaranteed to be accepted regardless of the state of your health and you will be covered for the full cash sum after an initial period of either 1 or 2 years.
As the cash sum is fixed, inflation will reduce its value so take this into consideration if you are looking for it to help pay funeral costs and also there is a chance that you could pay more in than the cash sum paid out; it just depends on how long you live.
How to start planning
If you are thinking about funeral prepayment options, it is worth looking online as there are a number of websites such as Over50choices who offer comparisons on prepaid funeral plans and over 50s life insurance. That way you can choose the best plan that suits your circumstance and pay the right price.
This article was written for Saving Sally by Ashley Shepherd; Managing Director of Over50choices, a personal finance and comparison website for the Over 50s, authorised and regulated by the Financial Conduct Authority.