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Will My Life Insurance Pay for A Funeral?

Life Insurance or Prepaid Funeral Plans - Which will pay for a funeral One of the most startling financial facts in the United Kingdom, is that the average cost of a funeral has risen by no less than 80 per cent in the last decade. While the BASIC fees now equate to £3,456 pounds, other expenses such as memorials, catering and flowers can add a hefty 2,000 pounds extra to an already burdened budget. Some consumers believe that over-50s life insurance or term life insurance are sufficient in regards to covering such needs. Just how true is this observation? Let’s take a closer look.

Life Insurance Policies: Good or Not so Good?

One of the most common forms of life insurance is represented in over-50s life insurance policies. Policy holders will make monthly payments as long as they are still alive. The principle is that the sum insured contributes towards funds allotted to pay for a funeral in the future. There are a few problems with this approach. First, the individual may live for a very long time and in turn, be paying more than he or she will eventually receive. Early cancellation fees inevitably apply, interest rates can vary and above all, this money can never be returned to the client. We should never forget that those who are already in poor health, can be denied such a policy altogether. This is most commonly due to the amount provided being a fixed sum, it does not grow or fix the funeral costs, so it may not be sufficient to pay all of the funeral costs at the time of need due constant price increases.

Term life insurance is the second popular option. As the name hints, these policies only last for a specific amount of time. Should the policyholder die within this term, then the funds will be paid towards the funeral. However, those who do not die during the term will not receive anything back out. Premiums can likewise dramatically vary.

The problem with each of these policies also revolves around legal hassles and time frames. Probate issues, lender fees and wills can interfere with payouts and in turn, even the most comprehensive life insurance policy may not be able to supply the money required when it is needed the most. This is why choosing a prepaid funeral plan is a much better option.

Prepaid Funeral Plans and Simplicity

These plans are very simple. Unlike a standard life insurance policy, the customer can pay fully upfront or they can opt to pay a fixed amount each month until the plan price is paid. The plan also fixes the cost of the funeral, the monies are held in a trust fund, which grows in line with inflation, so will always cover the funeral costs, no matter how far into the future the service is delivered. Upon one’s death, these funds are IMMEDIATELY paid directly to the funeral director to cover funeral costs. There are no legal hassles, no time concerns and no hidden clauses which could otherwise make payouts frustrating and slow. It is also critical to point out that prepaid funeral plans do not take one’s age or health into account, there aren’t any qualification rules. Some plan providers only provide some of the monthly payment schemes to people of a certain age. Those with pre-existing conditions will therefore not have to worry about being denied.

These and more are some of the very same issues that are addressed within the handy later in life planning guide, which is provided totally free of charge to all of our clients. You can request a copy by going to the Compare Funeral Plans UK. Not only will you be able to appreciate the benefits of these plans over standard life insurance policies, but you have the ability to make plan comparisons for prepayment funeral plans, with reviews of the varying services that are provided by the top funeral plan providers within the United Kingdom. In this sense, knowledge is indeed power.

Although life insurance policies are indeed helpful for a number of reasons and should be part of a sound later in life plan, the truth of the matter is that they are simply not designed to provide financial protection in regards to a funeral. Prepaid funeral plans can save time and money while enabling loved ones to grieve as they should.

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