Prepaid funeral plans and life insurance policies overlap but solve very different problems.
Prepaid funeral plans
The money in a funeral plan has a dedicated use which is for funeral related costs, payable at the time of death. Prepaid funeral plans lock in funeral director fees at today’s prices so, no matter how much they rise in the future, those costs are guaranteed.
They also represent a more personal and practical approach. Built around an individual’s specific wishes, individuals can decide on the type of service they want and the costs expected at the time of need. Funds are also set aside for third-party expenses such as crematoria or cemetery fees, flowers, celebrants or catering, with estimated inflation in mind.
A unique benefit of prepaid funeral plans is that in the event less of the fund has been spent on planned funeral expenses, any excess may be refunded once the full funeral cost is calculated. It’s rare to find another type of policy that gives families money back if it is not spent.
Some of our funeral plans also offer payment suspension options and catch-up periods. There are, of course, some potential risks. Arrangement fees and time. Whilst we can provide some protection against inflation in relation to third party costs mentioned above, there may be a small shortfall in funeral funds if a plan is relied on many years in the future.
Insurance policies
A lump sum paid out on death from an insurance provider can be used by beneficiaries to fund anything which may be funeral related, but could be mortgage payments, household bills or something entirely unrelated.
While the flexibility offered by life insurance can be valuable, it also comes with risks. Most premiums are payable for life, and if payments stop at any point, the policy may be cancelled with no payout at all – a potentially huge loss.
There’s also the question of value over time. Depending on how long you live, you could end up paying more in premiums than the lump sum ultimately paid out. And, because the cash amount is fixed, inflation steadily reduces its buying power.
More general benefits
A non-monetary consideration is worth sharing. Families are often faced with making decisions quickly, emotionally, and sometimes without a clear plan to follow of wishes or preferences.
A funeral prepaid plan does more than cover costs. It sets out choices made by the person who died and removes the burden of decision-making at an already painful time. Families know what to do, who to contact, and what the person wanted.
In an ideal world, people have both life insurance for wider financial protection, and a prepaid funeral plan that sets out wishes clearly and covers the funeral itself.
The real gift is not just money – it’s certainty. Any plan – a prepaid funeral plan or a free Plan of Wishes allows loved ones to focus on saying goodbye, not scrambling to make arrangements or worry about finances.
It’s never too early to have a conversation about your wishes. You can speak to experts like our funeral directors to explore your options.
It costs nothing to have the conversation, but it can be priceless for the people left behind.