Funeral plan or life insurance? (2024)

huckster Posts: 4,769

22 May 2011 at 8:25AM

Depends on what you are looking for. An investment or something to cover the funeral cost at the time of the persons passing.

As you realise investment plans do not always guarantee a minimum return or if they do, you have no idea whether any return will be enough to cover what you want it for.

Current basic funeral costs are in excess of £3k and are on the rise as local authorities increase the fees for cremation services, to make up for budget cuts. I cannot see the churches keeping their costs down, as a recent report indicated that burial plots could be hard to find within the next 10 years.

The advantage of funeral plans, such as those arranged by the Coop, is that you cover the funeral at 'todays prices' and not what they will be at the time of passing. You then have peace of mind that the costs of the funeral will be covered. You do not have to provide exact details of everything required, as the Coop offer flexible plans.

It really is up to the person concerned and their family. Sometimes in the event of someones passing, certainty over arrangements can be a real comfort. You don't want to have the worry over paying the potential massive bill that could be sent to the funeral arranger. There have been stories in the press of funeral companies sending in debt collectors, where people have been unable to pay.

catfish50 Posts: 545 Forumite

22 May 2011 at 8:31AM

huckster wrote: »

Depends on what you are looking for. An investment or something to cover the funeral cost at the time of the persons passing.

The latter.

The advantage of funeral plans, such as those arranged by the Coop, is that you cover the funeral at 'todays prices' and not what they will be at the time of passing.

Thanks for that.

Any more pros/cons, anyone?

22 May 2011 at 8:55AM

with the deceased-to-be making all the decisions in advance.

My dad wrote out his instructions when he had cancer (he's still ok).
I personally find it enormously comforting to know that when the time comes I will be carrying out his wishes with no stress for me.
Of course that's nothing to do with having a plan.
His wishes are just written on paper.

The advantage of a funeral plan is that you can guarantee it will cover the cost of the funeral i.e. rising prices are covered.
The advantage of life insurance is that you can include additional sums if you wish.

You need to also compare the costs.

catfish50 Posts: 545 Forumite

22 May 2011 at 9:16AM

lisyloo wrote: »

My dad wrote out his instructions when he had cancer (he's still ok).
I personally find it enormously comforting to know that when the time comes I will be carrying out his wishes with no stress for me.

I guess it depends how you see it. Making the funeral arrangements can be -- I don't want to say "therapeutic" because that word's so often misused, but it gives the relatives something practical to focus on. And in the case I'm enquiring about, the deceased-to-be (me) doesn't have any particular wishes about what is to be done.

The advantage of life insurance is that you can include additional sums if you wish.

You need to also compare the costs.

Thanks for those points.

Mojisola Posts: 35,544

22 May 2011 at 9:31AM

catfish50 wrote: »

I guess it depends how you see it. Making the funeral arrangements can be -- I don't want to say "therapeutic" because that word's so often misused, but it gives the relatives something practical to focus on. And in the case I'm enquiring about, the deceased-to-be (me) doesn't have any particular wishes about what is to be done.

My parents have funeral plans but the arrangements written into them are very basic - church or not, burial or cremation. It will be up to us to make the detailed arrangements unless they want to give us any more precise instructions.

Arranging the funeral can be "therapeutic" but it can also cause friction. One family member may say you would like X done; another is sure you'd hate that and really wanted Y. Grief can make people quite unreasonable and setting out a rough outline of what you'd like in a letter could save the family a lot of upset.

catfish50 Posts: 545 Forumite

22 May 2011 at 9:36AM

Mojisola wrote: »

Arranging the funeral can be "therapeutic" but it can also cause friction. One family member may say you would like X done; another is sure you'd hate that and really wanted Y. Grief can make people quite unreasonable and setting out a rough outline of what you'd like in a letter could save the family a lot of upset.

Yes, circ*mstances and families differ. The scenario you describe is not one which would occur among my nearest/dearest.

dunstonh Posts: 115,592

22 May 2011 at 9:43AM

If you do go down the life assurance route, then make sure it is life assurance you choose and not life insurance. The over 50s plans are life insurance (due to restrictions on when they pay out). A whole of life assurance plan is usually more cost effective and covers from day one.

Whilst some may argue the meaning of life insurance and life assurance (and rightfully so given the way the UK and US meanings have merged and the UK has dumbed down creating a variety of explanations of assurance/insurance), the key thing is that whole of life assurance is guaranteed to pay out on death, even if it occurs on day 1 of cover. The over 50s life insurance plans are not.

I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.

catfish50 Posts: 545 Forumite

22 May 2011 at 9:46AM

22 May 2011 at 10:48AM

If the idea is to pay funeral costs with minimal hassle, consider just using a bank account. Many banks like NatWest will send an undertaker a cheque from the value of accounts they hold when presented with a death certificate and invoice from an undertaker. It's fast enough to be done within a week with minimal hassle. Procedures should be checked with the bank concerned to ensure that it will pay out promptly in this way.

This keeps the money in a savings account earning interest until it's needed and the amount can be increased gradually as required to cover inflation.

Funeral plans are generally very poor value for money. Better to avoid them unless there's really some need to have one.

catfish50, from personal experience it does make it easier when there are clearly expressed wishes over things like religious or otherwise nature of a ceremony of some sort and cremation or burial. Desired location of remains is also something worth knowing. Even where there's agreement it's nice to have fewer decisions to make at a high stress time.

22 May 2011 at 11:01AM

If the idea is to pay funeral costs with minimal hassle, consider just using a bank account.

Like all "self-insurance" that doesn't help if have a claimable event short term before you've saved up enough.

Funeral plans are generally very poor value for money.

This really does depend on your situation.
My in-laws bought funeral plans but it was a good (genuine and legal) use of money to them because of their benefits situation.
It was not worth them having lots of capital. (We are not into illegal deprivation but I am into sensible financial planning).

catfish50, from personal experience it does make it easier when there are clearly expressed wishes over things like religious or otherwise nature of a ceremony of some sort and cremation or burial. Desired location of remains is also something worth knowing. Even where there's agreement it's nice to have fewer decisions to make at a high stress time.

I think this is a personl/family thing.
Some families may not need their wishes written down for them all to understand each other.
We have different religious views in my family so in our case it helps.