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Prepaid Funeral Plans: Fixed or Variable Interest Rates

prepaid funeral insurance

We have all heard of fixed and variable interest rates in terms of loans and insurance policies. It is important to understand the difference between the two if you are considering to choose a specific prepaid funeral plan over another. So, how do such rates impact what you will ultimately be paying for funeral insurance premiums?

Fixed Interest Rates

The most beneficial aspect of a fixed interest rate is that the amount you pay will not change over time. So, you can accurately predict your monthly and yearly budget accordingly. If you are looking for a concrete payment plan, funeral insurance premiums with fixed interest rates are the best options.

Variable Interest Rates

As their name suggests, variable interest rates can change over time. These will be set by the Bank of England and are based off of the strength of the British economy. There is a distinct benefit here for some policyholders. Should interest rates fall, you will essentially be paying less for your monthly premiums. However, what goes down inevitably rises. Increased rates of interest will dictate that you are paying more than you would be under a fixed policy.

Deciding Upon a Plan

Ultimately, fixed or variable interest rates will have much to do with your budget and flexibility in terms of payment options. Keep in mind that both of these concepts are irrelevant if you decide to pay a lump sum for a prepaid funeral plan. Also, the majority of providers prefer to offer packages with fixed rates.

There will naturally be differences between each policy and likewise, your funeral insurance premiums can vary accordingly. Notwithstanding the rates themselves, another great way to decide upon a plan is to take a look at our streamlined comparison guide. All of your major questions will be answered while the benefits of such policies are clearly explained. Any prepaid option is a very real investment; knowing the benefits of fixed and variable rates is important before making your final decision.

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