Life insurance and funeral plans are both financial products. They both provide you with coverage for funeral expenses, but differ in several ways. So, if you are in a dilemma and are weighing up life insurance vs funeral plans, nowsure has a breakdown of the two.
If you already know that it is life insurance you are after, get a hassle-free quote now.
Life Insurance vs Funeral Plans – Key Differences
Let’s explore the key differences between the two to give you an idea of how each could be of benefit to you.
The main difference when comparing life insurance with funeral plans is the intended purpose of their coverage. Life insurance is to provide financial protection to your loved ones if you die. A life insurance policy will not stipulate how to spend the payout, and therefore you can use the cash lump sum to cover:
- Funeral expenses
- Income replacement
- Mortgage payments
- Education costs
- Other financial needs
Funeral plans, on the other hand, only cover funeral and burial expenses. This may include costs such as:
- Casket purchase
- Memorial services and related expenses
- Cremation costs
Our online life insurance calculator tool can help you get a better idea of how much cover you may need and how much it will cost you.
Premiums and Payments
With life insurance policies, you need to pay regular premiums, typically monthly. The policyholder’s age, health, cover amount, and type of policy can affect the price of the premiums.
Funeral plans usually involve a one-off payment, or monthly instalments over a shorter period. The premium or payment structure for funeral plans is simpler and more accessible.
Life insurance policies can involve an underwriting process. This process assesses your insurability and may include medical exams and health questionnaires.
This may affect the premiums that you pay.
Funeral plans, on the other hand, can have minimal or no underwriting requirements. They can be available to anyone who meets the eligibility, regardless of their health.
Life insurance payouts are more flexible in how you spend the funds. You can use the payout from life insurance for many financial needs. This is to provide a financial safety net during tough times.
Funeral plans cover funeral expenses and do not cover other financial concerns.
Some life insurance policies accumulate a cash value over time. Examples are whole life or universal life insurance policies.
This means that, besides the death benefit, these policies build up a savings component too. The policyholder can use this themselves.
Funeral plans do not include a cash value component.
What Is a Funeral Plan?
There are different types of funeral plans with varying coverage levels.
- Basic funeral plans cover essential costs like funeral director’s fees and transportation.
- Standard plans may be more inclusive and offer a hearse and a basic coffin.
- Comprehensive plans cover more services. This could include a more expensive coffin, flowers or a funeral car for mourners.
The cost of a funeral plan depends on factors like burial or cremation, coffin, and location. The level of coverage and extra services will also impact the price that you will pay.
A funeral plan allows individuals to cover their funeral expenses. It also allows them a choice of funeral and a set budget. This brings financial peace of mind to both them and their loved ones.
What Is Over 50s Life Insurance?
Over 50s life insurance is for people aged 50 and over. Unlike other life insurance policies, over 50s life insurance does not require you to complete an eligibility test to get covered.
This payout can then cover funeral expenses. This means your loved ones do not bear a financial burden during an already difficult time. Or it can be a cash sum to provide financial support to your family or cover outstanding debts.
One advantage of over 50s life insurance is you can be eligible if you have pre-existing health conditions. You can spend the payout on any purpose. This allows flexibility to divide the funds where they are most needed.
Can You Have Over 50s Insurance and a Funeral Plan?
It is possible to have both over 50s life insurance and a funeral plan at the same time. This means a cash payout is available upon your death. You would also have a specific funeral plan in place to cover the funeral arrangements.
It is common for life insurance to include funeral cover as an extra feature. Here, it may have an alternative name, like a funeral benefit.
Make sure to check this with your insurer or in your policy wording if you have an active policy.
Paying for a Funeral without Life Insurance
If you do not have life insurance, paying for a funeral can be a financial burden. Not to worry though, there are other options to cover these costs without relying on a life insurance policy.
Save at Home
One option is to set aside money each month for funeral expenses.
By dedicating a part of your savings, you can save funds to cover your funeral costs. Another approach is to establish a joint bank account with a trusted family member or loved one. By contributing to this account, you can build up enough to cover the expenses when the time comes.
Apply for Funeral Expenses from the Government
Individuals can apply for a Funeral Expenses Payment from the government. This is a scheme to help cover funeral costs for those who are on certain benefits or have a low income.
So, Which Is Best for You?
There is no right answer. It depends on your needs. If you are looking to cover the cost of your funeral or looking for your funeral to be organised for you when you die, a funeral plan may be more suitable.
But, if your loved ones will require some extra money when you die, a life insurance policy may be more suitable.
For a Life Insurance Policy to Suit Your Circumstances, Call nowsure Today
At nowsure, we are here to help you find the most suitable insurance policy for your needs. We have a team of insurance experts ready to make insurance topics easier to understand.
It’s helpful to compare quotes from different insurers before going ahead. This helps you weigh your options and get the right cover for you. The cover you need depends on your own personal situation. Your age and medical history can also influence the cost of life insurance.
That is where we come in – nowsure has access to a panel of life insurance companies. By completing a few questions, we can get you an accurate quote. Our friendly team can make sure the details and the quote are bespoke to your circumstances.
Let us take the doubt out of the equation.
Contact us today or call us on 0800 033 4187 for a hassle-free quote and peace of mind.