Does life insurance cover funeral costs?
In 2021, the average basic funeral in the UK cost £4,054, according to data collected by insurer SunLife. Even a direct cremation, the budget option, cost an average of £1,647. So, it’s little wonder many people are concerned about the costs they’ll leave behind for their families. But can life insurance cover funeral costs?
Yes. Many people turn to life insurance policies to cover funeral costs. Standard life insurance policies can deliver payouts your family can put toward funeral expenses, while more specialist policies can specifically cover your final send-off.
Term and whole of life insurance policies leave your family with a lump sum after your death. This money isn’t usually earmarked so your beneficiaries will be able to do whatever they like with it. This may mean covering mortgage payments, clearing debts, and, very commonly, paying for your funeral. If you hold a life insurance policy, you should consider having a conversation with your family about what they should do with the proceeds, including making clear your wishes about your funeral.
Over 50s life insurance policies are also frequently used to cover funeral expenses. These policies deliver smaller, guaranteed payouts upon your death. These sums won’t be enough to support your family long-term but will likely cover your funeral. Some over 50s life insurance policies come with a funeral benefit, which pays out a certain amount to a specific funeral provider.
Besides insurance policies, other options for covering your funeral costs include pre-paid funeral plans and savings products like bonds and ISAs.