Funeral Expense Insurance: How it Works & How Much it Costs

Oct 3, 2010
Asa Ghaffar

Find the Right Funeral Expense Insurance Policy - Image by img_photo

You're considering funeral expense insurance, but aren't sure of the cost or how much the policy will pay out. Find out how to pay your final expenses.

A funeral expense insurance policy ensures that your family aren't left with a hefty bill for burial or cremation costs when you die. Alternatively, it could provide some inheritance for your children or grandchildren. When you pass away, burial life insurance pays a valuable cash lump sum to your estate. If you don't have sufficient savings and haven't already entered a pre-payment plan, a funeral insurance plan helps to avoid any unpleasant surprises for your family when you're no longer about to help.

Funeral Expense Insurance: Why it's so Important

A study by Axa Sun Life Direct revealed that the median cost of a funeral in the UK was £2,549. Costs have increased by 32.8% over the last 5 years alone. Don't forget that burial costs are consistently rising above the rate of inflation so you may wish to make an allowance for this. If you've only recently turned 50, you're going to need far more coverage as it is realistic to expect prices to double by the time you pass away.

The funeral notice, service order sheets, limousine hire, flowers, hire of the venue, catering at the wake, a memorial and probate could bring the current total to over £4,149. It is never too early to discuss the type of arrangement you want as this will help you make more accurate calculations. You may wish to use a combination of insurance and savings, which would help to reduce your monthly premium and make the payments more manageable.

Final Expense Life Insurance: Costs

The cost of £4,000 of death insurance for a 68-year-old woman is £27 per month. If you're 73, the monthly premium rises to £36. Age and sex, in that order, are the main determinants of premium.
The same level of coverage for a 68-year-old man is £34 per month because the life expectancy of men is lower. If you are just 5 years older, the monthly premium rises to £44 per month.

* The above funeral expense insurance quotes were provided by Sun Life Direct.

Burial Insurance Coverage: Eligibility Criteria

Provided that you're aged between 50 and 85, you are guaranteed to be accepted for final expense life insurance policy. There is no need for you to pass a medical examination. The premiums will remain the same for the full duration, but the terms of most policies specify that you must survive for 2 years or more.

Death Insurance: Making a Successful Claim

If you don't survive for at least 2 years, insurers will normally provide a sum of money that is at least equivalent to the cumulative value of all premiums that you've paid into the policy. Most insurers will offer a payment of 1.5 times this amount if you don't survive for long enough.

If you stop paying money towards your funeral expense insurance, coverage will cease. It's also important to appreciate that there is no cash-in value. This means that you will need to continue to pay the premiums for the remainder of your life or until a defined age is reached.

Sources

Dwyer, Paul. (Jan 20, 2009). "What's the deal with funeral costs?" BBC News.