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Should you choose life Insurance or a funeral plan?

If you have already made the decision to plan in advance and put some sort of financial protection in place to make sure your family does not need to pay for your funeral, you may be having some difficulty in deciding which is best, over 50s life insurance or a prepaid funeral plan.

Each of these products will ensure that the cost of your funeral is covered and your loved ones can focus on grieving, rather than dealing with financial worries. However, you should look into the differences between the two and decide which one best suits your needs.

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What do you want?

Have a think about what you want from the product you purchase. Do you want your family to have a lump sum of cash that can be used to pay for your funeral? Or would you prefer to invest in a prepaid funeral plan, which takes care of all the details, meaning your family don’t have to make any difficult decisions?

Over 50s life insurance will guarantee that your loved ones receive the sum of money you select when you take out the cover. They can use it however they see fit, such as paying off any debts you may have had, dividing it between the family as an inheritance or paying for your funeral. If they opt for the latter, they will need to make all the arrangements, which can be emotionally trying for them.

A prepaid funeral doesn’t have the provision of a cash lump sum, but it does mean that your loved ones won’t have much to do when it comes to the arrangements of your send off. The funeral director will have all the details, taking the burden away from your family. While there is no cash lump sum, there will be no financial concerns about how your funeral will be paid for.

Is one more expensive than the other?

The cost is different for both, so how much you want to pay will impact the decision you make when it comes to what product you opt for.

When you purchase a funeral plan, you select what you want covered and are then given several different payment options, such as lump sum or instalments over a period of months or years.  The funeral is only secure once it is paid for, meaning if you die before this, then money will still be owed.

If you take out life insurance instead, you will pay a fixed monthly fee - the cost of which depends on how much money you want to be released upon your death. You may end up paying more in than your family will get out in the end, and the value of your cash lump sum could devalue due to inflation. There is also an initial period - typically two years - where no payout will be made if you die.

Pros and cons

To help make your decision easier, we’ve put together an ‘at a glance’ list of the pros and cons of each product.

Over 50s life insurance

  • Guaranteed cash lump sum, which can be used in any way
  • Fixed monthly payments
  • Some policies are wide-ranging, covering accidents, illnesses and injuries
  • Cover can be costly if your health is poor
  • The lump sum may be paid out after the funeral has taken place
  • Your family have to arrange your funeral, which can be difficult for them

Prepaid funeral plan

  • The plan is actioned as soon as you die
  • Cover is guaranteed, usually without the need for a medical exam or questionnaire
  • Your health isn’t taken into consideration, so the cost won’t be higher if you have an Illness
    • Your plan is only secure once it has been paid for in full
    • There is no cash lump sum

Which is the least hassle?

The later life market is brimming with options and one could spend a considerable amount of time trying to get to the bottom of what truly represents the best possible deal for them. But for ease and peace of mind, a funeral plan is undoubtedly the simplest option. By calling or visiting your local independent funeral director, you can spend an hour or two talking about funeral arrangements, make a payment, receive your certificate and information on procedures to follow when needed and then never think about your funeral plan again.

One of the biggest selling points of a funeral plan is the peace of mind it provides to holders, who take comfort knowing their families and friends will have nothing to worry about. While life insurance policies require the holder to continue to pay for as long as that person lives, funeral plans are a cost-effective way to sort out inevitable arrangements.

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