Planning for a funeral with life insurance

According to Age UK the average cost of a funeral is increasing each year and may rise to as much as £4,194 by 2016[1].
Not many people like the thought of saving for their funeral but the one thing that is certain in life, is death and many people want to avoid leaving the financial burden to their family and friends.

With the cost of a funeral amounting to thousands of pounds, it may be sensible to consider a life insurance policy that lasts for the length of your life time – called whole of life cover or whole of life insurance.
A whole of life policy is a type of life insurance that simply pays out a lump sum on death, but rather than pay out should death occur within a specific time period, it will pay out on death whenever it happens.

The alternative to whole of life insurance is term insurance. The significant difference between the two is that a term insurance policy expires after a set time or when the policy holder reaches a set age; often retirement age, the end of the mortgage or when the children are no longer financially dependent. After this has happened the policy holder is no longer covered.

With a whole of life insurance policy, the policy holder is covered until their death – unless they cancel their cover or stop paying premiums. This means that regardless of when the policy holder dies their dependents will receive a lump say pay out – often put towards funeral costs.

One thing that is worth bearing in mind is that whole of life insurance costs more than a term life insurance policy. As there is no end date on the policy it is guaranteed to pay out. Therefore the risk to insurers is greater, so the premiums are higher which means that people can usually only afford a lower sum assured.
This is the same principle insurers apply to illnesses or lifestyle choices which also increase the risk of premature death and subsequently increase the likelihood of an insurer having to pay out. To offset this risk insurers charge more.

As the sum assured is a relatively small sum when compared to a term life insurance policy, a whole of life policy is ideal if you are looking to remove the burden of funeral costs.
If you would like to speak to an adviser who can recommend the best solution for your circumstances please call us on 0333 234 1655.


Life insurance

Read about Endsleigh life insurance.