What does a funeral plan cover? Are there any conditions? What happens to your money once you die? If you’re wondering how funeral insurance works, here’s our guide.

What is funeral cover?

Funeral cover isn’t quite like other forms of insurance. Most insurance is a way of protecting yourself should something unexpected happen – should your holiday luggage get lost, your home get damaged by flood or your car suffer a mishap. These are things you hope will never happen (and may never happen), but if they do the insurance will help cover the financial costs. Death, on the other hand, is a (hopefully very long distance) inevitability for us all. So funeral insurance cover isn’t a traditional insurance plan in the sense that there’s no question of whether it will pay out. It’s simply a way of ensuring that, when it does, your family won’t be burdened with your funeral costs.

How does funeral insurance cover work?

It’s important to be clear about what type of funeral cover you want because, broadly speaking, there are two types. A funeral cover plan is like paying for your funeral in advance. It means that, at what is likely to be an extremely emotional time for your family, they don’t face the additional stress of finding money to pay for many of the costliest elements of a funeral. The alternative is whole life cover, which is an insurance policy which will pay out on your death and which can (but doesn’t have to) be used by your family to pay for your funeral. We explore it in greater detail below.

Features of a funeral plan

Funeral plans (as opposed to whole life policies) vary, so it’s important to always check each plan’s details, but most will feature the following elements: Low cost monthly payments over up to 25 years: There are several ways to spread payments but in general you’ll need to be over 50 to start a plan and aged 80 or under when the plan finishes. Although payments usually need to be complete by the time you reach 80, the plan will remain in place until it’s eventually needed. You match the cover you need to the service you would like: Most funeral plans enable you to choose the type of service you would like at your funeral. The price of the plan or policy will vary depending on the service you choose. Generally speaking your plan will cover costs typically met by a funeral director, for example…

• A casket
• A hearse and limousine(s)
• A church service with your choice of celebrant
• Viewings of the deceased
• Funeral director costs

The costs included in your plan are protected: You may take out a funeral plan today, but you would hope and expect that it won’t be needed for many years yet. By the time it is required the cost of a funeral will have increased. A funeral plan will often lock in the services you agree at today’s prices. 

Understanding the detail

It’s important to understand the limits and conditions of a typical funeral plan: Initial qualifying period: Most funeral plans won’t pay out straightaway. If you bought funeral insurance cover today, it may be one or two years (known as the qualifying or initial wait period) before the plan will pay out. There may be a deposit: Not every funeral plan requires a deposit but some do and the amount can vary significantly. Always check before you agree to a product.  Not everything will be included in your funeral plan: If it wouldn’t usually be a part of the service provided by your funeral director, your funeral plan probably won’t cover it. That includes things like flowers, plaques, headstones and a wake, but also the cost of burial plots. The money can only be used for your funeral: The amount in your plan can only be used to cover the costs described above. If you pay more money into your plan than your funeral costs, your family won’t get the extra. 

How to cover the whole cost of your funeral

The main alternative to a funeral plan is whole life cover. Because this is an insurance policy rather than a funeral plan, it’s more flexible in the way you can choose to use it. You can explore the differences between funeral cover and whole life cover here. This form of funeral insurance cover works in a way that doesn’t protect you from the increasing cost of a funeral but does grow in the way any other investment would. That should offset some and possibly all of any price increase. Unlike a funeral plan, your family can keep any money that’s left once your funeral has been paid for. In fact, they can spend the entire amount as they wish. With the right planning, you could use full life cover to ensure your family is protected from the entire cost of your funeral, including the things a funeral plan wouldn’t usually include. To explore which is the right cover for you, and for more help in understanding what the difference is between funeral cover and life cover, please talk to us now.