Financing Your Funeral With Your Life Insurance

If you are young, fit, and healthy – life insurance would typically be the last thing on your mind, however, you must plan. Such insurance can protect your loved ones from rising funeral costs, should you pass away within the policy term.

Since 2004, the average funeral costs have risen by 128%. The costs rose by 5.7% in the past year in Scotland only. To help your loved ones, you can ensure you have the funds to pay for your own funeral by making it part of your life insurance package.

The average cost in the UK

According to SunLife’s annual Cost of Dying Report 2021, the cost of dying was £9,263 in 2020 – up £71 (+0.8%) since 2019. The ‘cost of dying’ being the total cost of a person’s send-off – including professional fees, the funeral service, and optional extras like the wake or gathering. Without taking those fees into account, we talk about the ‘cost of a funeral’.

The report also revealed that the average cost of a basic funeral was higher than ever before, estimated at £4,184 – up 1.7% since 2019. A basic funeral with burial will cost you on average £5,033 (+1.2% since 2019), £3,885 with cremation, and £1,554 (down 4.4%) for direct cremation.

The costs vary according to regions too. While London and the South East are the most expensive places to be laid to rest, Northern Ireland and Wales are among the cheapest.

Let’s note that if you can’t afford the funeral fees, you can apply for the Funeral Support Payment in Scotland. It can help pay for burial or cremation fees if you are on a low income or receiving benefits.

How can Life insurance help you pay for your funeral?

Life insurance can be used to cover funeral costs with the lump sum that is paid out when the policy holder passes away. You get to nominate beneficiaries that will receive a lump sum and how they choose to spend it is up to them. It means that they can use the insurance pay-out against expenses such as a mortgage, school fees as well as funeral if they decide to.

Alternatively, some insurers offer funeral life insurance add-ons to their policies, through which you, the policyholder, can decide to set aside 10% of the pay-out for funeral costs for example. This way you’ll be sure that the funeral will be covered with the funds.

To make monthly contributions to an overall funeral fund, you might want to think about an Over 50s Life policy.

Speak to a GPD advisor

Planning your own send-off and finding the right solution can be a daunting experience. For ultimate help, consider contacting GPD Mortgage Solutions and they’ll lead you in the right direction. You will also benefit from a FREE WILL writing service when you take out a life insurance policy with us, call today!