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Prepaid Funeral Plans Vs Funeral Insurance

There has been a great deal of debate in regards to whether funeral insurance, also known as over 50s life insurance is the most appropriate or are prepaid funeral plans a wiser choice. This can be a bit of a tricky question, as each will offer its own set of benefits. However, many feel that prepaid funeral plans are the most advantageous option to select.

So why is this the case and more importantly, what are some of the differences between a prepaid option and an insurance policy?

Making Comparisons

This is likely to be the most profound difference between these two options. Funeral insurance policies (or over 50s life insurance plans in general) offer benefits that may be delayed for a substantial amount of time. This can very much go directly against the requirement for funeral expenses to be covered immediately. On the contrary, prepaid funeral plans provide a lump sum that is paid directly to the funeral director at the time of need. So, the financial “guesswork” can be taken out of the equation and the wishes of the departed can be addressed without the family having to endure further financial woes.

Keeping your money

All payment that are made into a prepaid funeral plan, remain and can be withdrawn by the plan holder at any time in the future, usually subject to a small administration fee for doing so. The payments that are made into a over 50s life insurance, do not accrue any value. The money paid in would be lost if payments are stopped and in addition, the value of the amount that the policyholder insures does not grow, so the policy will not keep up with price increases or inflation. Choosing between the two options is simple, a prepaid funeral plan that is paid for with low cost monthly payments will become paid up once the original purchase price is paid, but life insurance payments must continue until death, which could be 30 or 40 years. The initial payment that is made into a funeral plan, locks the price of the plan at the price that applies on the day of purchase, and in most cases these plans are fully paid up in around 10 years, although longer terms of up to 30 years are now available, which help to keep the cost of the monthly payments down and they compete closely with the cost of life insurance.

Medical Checks

It is a known fact that most life insurance policies require substantial medical checks before one is approved for even the most basic of plans. Should the applicant not meet an age requirement or have an existing medical condition, he or she might not be approved at all. Once again, this is in contrast to prepaid funeral plans. So long as the applicant is over the age of 18, they are free to setup a plan. A pre paid funeral plan requires no medical checks at all - Approval is quick and easy and the plan is setup within a few minutes over the phone, no long forms to complete!

Fixed Payments

Another frustrating aspect of funeral insurance policies is that their premiums may fluctuate over time. This is primarily caused by the variable interest rates that are attached to the fees. If you are on a tight budget, any increase in such premiums can prove frustrating and even cause the client to miss payments (resulting in fees and even a policy cancellation). On the other hand, prepaid funeral plans offer premiums that are fixed and will never rise. This means that you are free to budget accordingly and still know that the lump sum to be paid out at the time of need and is guaranteed to cover the cost of the funeral director.

Like any type of financial plan, it is always wise to compare both sides of the proverbial coin. To make things easy, Compare Funeral Plans UK has gone ahead and provided you with a monthly payment plan options that illustrates the benefits and drawbacks of each option. While there are indeed some benefits of a standard funeral insurance policy, those who are looking for a greater amount of security and immediate access to funds upon one's death would be wise to opt for prepaid funeral plans.

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