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Get to know the differences between a funeral plan and a life insurance policy and compare what they both cover.

When researching later-life financial planning options, you may be considering funeral plans or life insurance. Both options allow you the peace of mind that your family will be supported financially but in different ways.

Funeral plans let you choose and pay for your funeral in advance so your loved ones don't have to cover the costs or arrange the logistics. Life insurance, on the other hand, is a way to ensure your family will receive a lump sum of money should you die during the period you've chosen to be covered for.

Learn more about how a funeral plan or a life insurance policy differs to help you weigh up each option.

What is a funeral plan?

A funeral plan is a prearranged package that covers the costs associated with a funeral. Funeral plans encompass essential services such as the cremation fees, transportation, and administrative costs.

One advantage of a funeral plan is the ability to lock in today's prices for future services, protecting against inflation and rising funeral costs. While prearranging a funeral can also alleviate emotional stress for loved ones at the time of need.

Unlike life insurance, which provides a lump sum payment upon the policyholder's death, a funeral plan directly addresses funeral expenses. While life insurance offers flexibility in how beneficiaries can use the payout, funeral plans are specifically tailored to cover funeral-related costs, ensuring that financial burdens are minimised during a difficult time.

There are various ways to pay for a funeral plan, including via a single payment or monthly instalments which allows you to choose a payment method that best suits your financial situation.

The process of taking out a funeral plan will follow these steps.

  1. You choose the type of funeral you'd like.
    When you're researching funeral plans you will naturally start thinking about what you want.
  2. You select a funeral plan provider.
    Choose between extravagant or simple plans.
  3. You select your payment option.
    By paying in monthly instalments you can afford a funeral that may otherwise be out of your budget.
  4. You share your wishes with your loved ones.
    Having a funeral plan leaves no doubt about the type of funeral arrangements you want.
  5. You have peace of mind that your funeral is covered.
    As long as the payment conditions of your plan are met, your funeral is guaranteed to go ahead.

Flowers On Wooden Coffin

What is life insurance?

Life insurance is a financial product designed to provide a lump sum payment to beneficiaries upon the policyholder's death. Unlike funeral plans, which specifically cover funeral expenses, life insurance offers a broader scope of coverage, allowing beneficiaries to use the payout as they see fit. This flexibility can encompass various needs, including replacing lost income, settling outstanding debts, or funding education expenses.

One of the key distinctions between life insurance and funeral plans lies in their primary focus. While funeral plans directly address funeral costs, life insurance serves as a safeguard against financial hardship for beneficiaries after the policyholder's passing. This fundamental difference dictates how the funds are allocated and utilised.

In terms of costs, life insurance premiums are typically based on factors such as age, health status, and coverage amount. Depending on these variables, premiums can vary significantly between individuals. Unlike funeral plans, which may allow for single or monthly payments, life insurance premiums are often paid on a regular basis over the duration of the policy.

Pros of life insurance include the financial security it provides to beneficiaries, offering a safety net during a challenging time. Additionally, life insurance policies can accumulate cash value over time, providing a potential source of savings or investment. However, there are potential downsides, such as the necessity of passing medical underwriting and the possibility of premiums increasing over time.

Increasing cover

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If you’re getting life insurance to cover your family's living costs, the cost of living is likely to rise over time.

There are policies available where the payout increases to account for inflation, but it's worth noting that the monthly payments will also rise.

Decreasing cover

private cremation plan small

If you’re covering yourself against an expense or debt that will decrease over time, for example your mortgage, you can get decreasing cover.

As you owe less money on your mortgage, your family will receive a smaller payout amount to pay it off.

Level cover

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If you’re happy for your loved ones to receive a set payout that doesn't change, life insurance with a fixed payout is available too.

Monthly payments for this type of cover will also be fixed so they don't change for the duration of your policy.

Your age will affect the price you pay for life insurance cover. The older you are, the more expensive it is.

You will also be asked medical questions to determine whether life insurance can be offered to you. These can affect how much your monthly payments will be as well.


What is life assurance?

Whilst looking into life insurance policies, you may also come across other products like over 50 life cover or life assurance.

Whereas life insurance is cover for a fixed amount of time, life assurance covers you for the whole of your life.

  • With life assurance, a payout is guaranteed when you die, so monthly payments are likely to be higher.
  • Payments will also be ongoing throughout your life.
  • The amount you have to pay could go up and you will need to accept these price rises to continue your cover and keep your payout.
  • You can increase the size of the payout you'd like to receive but not decrease it.
  • Your age when you take out the policy also affects how much you pay.

Important

The terms life insurance and life assurance can sometimes be used interchangeably, so always check the specific policy you're taking out for details of your cover period and payment terms.

Get in touch

At Distinct Cremations we offer cremation only funeral plans and plans for modestly attended funerals.

We're happy to answer any questions you may have about our plans over the phone, or you can request a free guide for details about what we offer. If you've decided a funeral plan is right for you, you can also view our products and take out a plan online.

Have a chat with us

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Want to talk through our options? If you have questions or would like some in-person support we’re just a call away.

Call us on 01543 212997

Get a free guide

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Need some time to digest the details? You can download a PDF of our guide online or get a printed copy posted out.

Get our guide

Set up a plan online

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If you’re happy that one of our plans is exactly what you’re looking for, you can get everything set up yourself online.

View our funeral plans

How do funeral plans compare to life insurance?

The average cost of life insurance in the UK is £34.43+ per month. However, the calculation for a life insurance plan depends upon a number of factors including age, health status, coverage amount, type of policy and policy length. With a life insurance policy you will continue to pay until it is needed.

With Distinct Cremations, the cost of a funeral plan starts at £19.44* over 10 years. This calculation depends on age, but doesn't include health or medical factors. The plan is also guaranteed to cover the costs in your plan after just 12 months, meaning that if you pass away before you have finished paying, your plan is guaranteed with no further payments required.

+ AVERAGE LIFE INSURANCE COST UK [2024], reassured.co.uk/life-insurance/average-life-insurance-cost-uk/
* Price advertised is for a 50 year old paying over a 10 year period. Total cost is £2,332.80 and includes administration fees.

Here's a table comparing the pros and cons of life insurance and funeral plans:

Aspect Life insurance Funeral plans
Coverage Provides a lump sum payout to beneficiaries upon the policyholder's death, offering financial security and flexibility in how the funds are used Covers specific funeral expenses, such as cremation fees, transportation costs, and administrative expenses
Flexibility Offers a broad scope of coverage, allowing beneficiaries to use the payout for various needs, such as replacing lost income or settling debts Provides a structured approach to covering funeral expenses, ensuring that financial burdens are minimised during a difficult time
Payment Options Premiums are typically paid on a regular basis over the duration of the policy, with options for different payment frequencies (monthly, quarterly, annually) Can be paid for in a single payment or through monthly instalments, offering flexibility in payment
Cost Premiums are influenced by factors such as age, health status, coverage amount, and type of policy Costs can vary depending on factors such as the type of funeral and age
Inflation Protection Generally, does not offer protection against inflation, meaning the payout's value may decrease over time or monthly payments increase Our funeral plans allow for locking in today's prices for future services, and monthly payments will never increase, protecting against rising funeral costs due to inflation
Transferability Policies may be transferable if you move or change preferences, depending on the terms of the policy You are unable to transfer the plan to another funeral provider

For both life insurance and funeral plans you will need to decide what happens after your death.

  • Choose your next of kin or the person you trust to either receive the money from your life insurance or instruct your funeral provider to make your funeral arrangements.
  • Communicate your plans with them to make sure your life insurance is claimed or your funeral plan is used.

Can you have both types of cover at the same time?

Funeral plans and life insurance are designed for different purposes and it is completely possible to take out both at once.

Just make sure that if you're paying for both monthly you can keep up with the payments. Your funeral plan may be cancelled or your life insurance cover may end if too many payments are missed.

Taking out both a funeral plan and a life insurance policy means:

  • You don't have to worry about your family covering the costs of your funeral.
  • You can alleviate the stress your loved ones may feel about making funeral choices on your behalf.
  • You are protected from the rising costs of funerals which have more than doubled since 2004.#
  • You can ensure your spouse or children also receive a lump sum payout that they can use for expenses other than your funeral.

# Funeral costs were £1,835 in 2004 and £4,141 in 2023 (SunLife Cost of Dying Report 2024, sunlife.co.uk/funeral-costs)

Laptop For Researching Funeral Plans On Table

Our funeral plans

We offer plans for simple, no fuss cremation funerals.

Choose between our Unattended Direct Cremation Plan, Small Attended Cremation Plans or full length celebrant-led Simple Funeral Plan.

For additional pricing information and a full list of our optional extras, please see our price list.

Unattended Direct Cremation Plan

From £1,699 or £19.44* per month

Our Unattended Direct Cremation Plan is a great choice for those looking for a simple, low-cost unattended cremation without a funeral ceremony.

With our Unattended Direct Cremation Plan, the cremation takes place with no service or mourners present at our high-quality crematoria where dignified care is guaranteed.

View our Unattended Direct Cremation Plan * Price advertised is for a 50 year old paying over a 10 year period. Total cost is £2,332.80 and includes administration fees.

Small Attended Cremation Plans

From £2,099 or £25.23** per month

Our Small Attended Cremation Plans offer a private funeral where the number of people attending is limited to a small gathering of friends and family.

With our Small Attended Cremation Plans, you can have up to 8 people attending a 10 minute service or up to 20 people attending a 20 minute service.

View our Small Attended Cremation Plans ** Price advertised is for a 50 year old paying over a 10 year period. Total cost is £3,027.60 and includes administration fees.

The option to have a completely unattended funeral means you can save money and your family can celebrate your life in their own unique way instead.

Which option is better value for money?

Funeral plans and life insurance meet very different later-life financial planning needs. Whether or not either option is worth your money depends on what you want to happen when you die.

Do you want to pay for your own funeral or get a payout to support your family?

The amount you pay for your funeral plan or life insurance varies widely depending on what you choose. Factors like your age can also affect the amount you pay.

Hands Holding Documents To Review

Funeral plans

Funeral plans could be a good option for you if you worry about how your family will cover the costs of your funeral.

Even if the money for your funeral could be taken from your savings, property or other assets, some of your money could be lost to inheritance tax and it can take time for funds to be released. Funeral providers often need a payment or deposit upfront to start arrangements so your family could have to cover the costs initially.

Factors that affect the amount you pay are:

  • How extravagant you'd like your funeral to be
  • Whether you pay for your funeral plan upfront or monthly
  • Your age if you're paying monthly

Woman Using Phone And Laptop

Life insurance

Life insurance could be a good option for you if you worry about how your loved ones would cope financially if you die.

You may have children who are at school or university and are financially dependent on you. Or it's possible you have a spouse who relies on you to pay the mortgage. You may just want to gift your loved ones money in the event of your death. A life insurance policy means that if you die whilst covered you can still support your loved ones.

Factors that affect the amount you pay are:

  • The payout amount you'd like
  • The duration of your insurance cover
  • Your age and your health

Are funeral plans and life insurance regulated?

Providers of both funeral plans and life insurance products are subject to regulation to help protect consumers' money.

Distinct Funeral Plans Limited (DFPL) is authorised and regulated by the Financial Conduct Authority (FCA) to sell and administer funeral plans. As part of our regulatory responsibilities, we provide full and clear information about how we keep our funeral plans safe.

Companies that sell life insurance products are authorised by the Prudential Regulation Authority (PRA) and regulated by the FCA and PRA. They are also subject to the same regulatory standards, designed to enhance consumer protection and to protect the integrity of UK financial services markets.

How we keep your money safe

Other useful resources

To help you continue your research into the financial products available to you and plan for later life, you may find these other resources helpful.

How to choose a funeral plan

A couple funeral planning

Decided that a funeral plan is right for you? Find out how to choose a plan that takes your funeral wishes and preferences into account.

Choose a funeral plan

How to prepare for your own death

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As well as planning financially, there are some other important ways you can prepare yourself and your family for your death in the future.

Prepare for your death

Arrange a funeral from just £1,199

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If you need to arrange a funeral for someone else, whether now or in the future, we can provide a compassionate cremation funeral.

Arrange a funeral

We offer the highest level of support, but don't take our word for it

Below are a selection of reviews from those who followed their instinct with Distinct and chose to buy a funeral with us.

5/5
Based on 721 reviews Feefo Logo Feefo Gold 2024
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Werner 12 Jul 2024
Friendly, pulite and simply SUPER
Nikki 10 Jul 2024
There was nothing too difficult or no question too silly. Every care was taken with all the arrangements and I was kept up to date at all times. I sent through items which were quickly handled and was notified of their receipt and the actions made with them. Even changing things was never too much of a problem.
Anon 27 Jun 2024
The service was first class. Signing up was easy to complete and the follow up call to ensure every thing was as we had expected was a nice personal touch.
John 27 Jun 2024
It was polite, patient and thorough. i was given as much time as I needed to reach a decision.Completely
Anon 30 May 2024
first class
Mark 21 May 2024
Excellent communication, very helpful and we got just what we wanted in a service. Highly recommended and we will use again. Mark Oliver
Anon 2 May 2024
Service very efficient, and comprehensive. Understandably, you "chased me up" when there was a delay in my response to place an order, but this delay was whilst I contacted all those relatives who might have had a view to express.
Anon 24 Apr 2024
I was very happy with the service I received and they are only a phone call away if I or my sons should need advice or help in any way
5/5
Based on 721 reviews
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