What is funeral insurance?

The history of ceremonial burial, cremation or other ritual carried out for the dead is as old as mankind itself. Ceremonies may take many different forms, but if they share one thing in common, it is that they are invariably a (sometimes considerable) financial burden on the surviving family, relatives and friends who make the necessary arrangements.

For this reason, nineteenth century Britain saw an upsurge in the creation of “burial clubs” where people were able to make regular savings towards the cost of their eventual funeral. The aim was to avoid the humiliation of a pauper’s funeral and burial without so much as a headstone.

The modern equivalent

As a whole generation of so-called baby boomers are beginning to come towards the end of their lives, as space for burials becomes ever more limited and rising costs take their inevitable toll, the BBC has warned of a “time bomb” in the future cost of funerals.

The average cost of funeral might rise to £7,000 or more by the year 2024, says the broadcaster.

Defusing the time bomb

It may come as no surprise, therefore, that more and more people are looking for ways to defuse their own personal time bomb of escalating funeral costs.

Many funeral directors already offer the opportunity for individuals to make every arrangement for the eventual ceremony to be planned in advance. Not only does this give the individual an opportunity to avoid any doubt as to their final wishes, but it also provides the chance to pay for those arrangements in advance – at today’s prices.

Planning ahead and making a prepayment to the funeral director may help to defuse the risk of impossibly inflated prices in the future – but for one major drawback. If your chosen funeral director has the misfortune of going out of business, all your careful plans may amount to nothing and the money you have paid may be completely lost.

Funeral plans

The modern response has seen an increase in the growth of funeral insurance.

Under the self-regulation of an organisation called the Funeral Planning Authority, an industry has developed which allows individuals to continue to plan every detail of their eventual funeral and to pay for it in advance.

The crucial difference is that the money you pay to meet those future funeral costs is safely protected by one of two ways:

  • either it is placed in trust, where it remains in an entirely protected independent environment until it is needed to pay for the funeral costs; or
  • the funds are used for the purchase of a funeral insurance package in the form of a whole of life policy made on behalf of the individual concerned. This particular form of insurance for the over 50s typically has guaranteed acceptance, without the need for any medical or lifestyle questionnaire. As with other whole of life policies, the insurance pays out upon the death of the policy holder and, in this case, the cash benefits are designed to cover the costs of the funeral.

Funeral planning and funeral insurance, therefore, may be regarded as the safer, modern way of ensuring that your last wishes are respected in every last detail – and paid for in advance at today’s prices.

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