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How can life insurance cover funeral costs?

Just like with life insurance, many of us don’t dwell on our funerals other than the purely aesthetic choices. You may have occasionally thought of what song or prayer you’d like to feature at your own funeral or the flowers you would prefer but we rarely think about the cost of the whole funeral and how it will be paid for – after all, we won’t be around to pay for it.

By not planning in advance, we may cause financial difficulty for our loved ones at a distressing time. Funerals are surprisingly expensive.

According to the Royal London National Funeral Cost Index Report 2019, the average cost of a simple funeral with cremation is £3,250. The average cost of a simple funeral with a burial is £4,321. As with most things, these prices are always rising, so today’s price may differ.

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There are several factors that affect how much you will pay for a funeral, depending on how affordable or extravagant you want the funeral to be. However, even a simple funeral arrangement is fairly expensive in the UK, certainly more than many people are aware of.

Term insurance

Term insurance is the most popular type of life insurance and it is usually taken out when people want life cover for a specific amount of time. This may be to pay off a mortgage, or debt, or to cover the care of young children until they grow up. The policy will only payout if you die within the term and this is usually in the form of a lump sum. There are two main types of term life insurance policy:

Whole of life insurance

If you want a guaranteed pay-out, no matter when you die, then it is best to opt for whole of life insurance, also known as “life assurance.”

Over 50’s life insurance

The younger you are, the easier and cheaper it is to get life insurance, however, there are options for plans if you are a bit older and one of these is — over 50s life insurance.

This is a useful plan for those who do not want to go through a medical check as anyone will be accepted. As with whole-of-life insurance, a payout is guaranteed but the payout and the premiums are usually quite small. This is why many people use this plan for solely funeral expenses.

Funeral insurance

As we have seen, the payout from regular life insurance can be used towards your funeral but what if you want a specific plan just for funeral costs?

Funeral insurance is specifically tailored to cover the costs of your funeral. You pay a premium and your family members will receive a lump sum after you die. Funeral insurance plans usually cover the fees of funeral directors and burial or cremation costs but not extra expenses, such as flowers, the headstone, or the wake.

When choosing between life insurance or a funeral plan it is important to first work out exactly what you need from the cover and go from there.

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You may be wondering what you can do if you can not afford life insurance and do not have savings for a funeral.

In the UK, the government has a scheme called Funeral Payment which is aimed at people with low income. Any money received will have to be paid back from your estate. It will help pay for costs such as death certificates, cremation or burial fees, and travel to the funeral.

Need life insurance advice?

If you are thinking about taking a new Life Insurance policy to protect your FAMILY or HOME, you can contact our team of FRIENDLY EXPERTS to get FREE advice on 0800 009 6559 or CLICK HERE


Gov.uk – Get help with funeral costs (Funeral Expenses payment)

Citizen’s Advice – Arranging a funeral

Citizen’s Advice – What to do after a death

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Is it worth paying for life insurance?

Yes, if you’ve got children or financial dependents then you should have life insurance to protect them if you die. Martin Lewis and the Financial Conduct Authority recommend that you take out life insurance to protect your family and your home. Generally, life insurance premiums start from as little as £5 per month and will be cheaper for younger adults.

Common myths about life insurance:

  • Life insurance won’t pay out (pays out 98% of claims)
  • People with medical conditions can’t have life insurance
  • Life insurance is expensive
  • Savings can be just as effective as life insurance
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What is the average cost of life insurance per month?

Based on recent research carried out, the average cost of life insurance is approximately £38 per month and the average level of cover is £152,000. Life insurance premiums also vary dramatically from one insurance provider to another and you can reduce your monthly premiums by shopping around.

Fundamentally, life insurance premiums vary depending on your age, health and the amount of cover that you need, starting from as little as £5 per month. You can also get life insurance to protect your family and your home against financial loss if you die.

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Average cost of life insurance - iam|INSURED

What does life insurance cover you for?

Life insurance is a monthly renewable ‘term insurance’ contract that pays out a cash lump sum or regular payments on death to your family or beneficiaries. Policies are most commonly used for family protection or mortgage protection for your loved ones if you die and your household income reduces, plus the additional issues of losing a parent or carer.

Traditional life insurance will not exclude any pre-existing medical conditions and will cover suicide after 12 or 24 months. You can also use life insurance for business protection purposes as well as tax-efficient business life insurance for directors or key people.

What are the disadvantages of life insurance?

The biggest and most common problem that consumers have with life insurance is the cost and the monthly premiums. This is the top reason for policy cancellations and why more people don’t take out life insurance to protect their family.

Another key disadvantage with life insurance is that it holds no investment value, nor can you cash it in. Life insurance works like any other traditional general insurance policy (e.g. car insurance, house insurance, pet insurance etc.), you pay a monthly premium and it will pay out in the event of a claim. Some people decide to use savings instead of taking out life insurance but you need to make sure that you have sufficient savings to cover the costs of death for your family.

Why do I need life insurance?

The fact is that nobody actually ‘needs’ life insurance, but it is strongly recommended that families and couples have cover to protect their loved ones in the event of death. Martin Lewis recommends life insurance and says “this is something that every parent, partner, or person with any other type of dependent needs to consider”.

Life insurance financially protects your loved ones if you die and pays out a cash lump sum to repay your mortgage, pay for school fees, replace lost income, and pay for regular outgoings. Mortgage life insurance is not linked to your mortgage debt so you can use it to pay off some or all of your mortgage.

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Our Mission: To provide easy access to fair pricing, affordable protection and the very best financial security to families and individuals. We are dedicated to offering comprehensive insurance solutions that safeguard the well-being of our policyholders. Guided by integrity, transparency, and a commitment to excellence, we strive to empower consumers and families to face the future with confidence. Our mission is not just about policies; it's about protecting dreams, ensuring legacies, and being a trusted partner on life's journey.

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