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Funeral plan

Many life policies for older people are sold as a way of helping pay for your funeral. In reality, the cash sums paid out are rarely enough to offer more than a contribution to funeral costs.

There are three types of funeral plan:

  • Whole Life policies for the over 50 which only cover a partial contribution to funeral and where the family has to make all the arrangements
  • A pre-paid funeral plan where arrangements are made but only some costs are covered, leaving substantial costs for the family
  • A pre-paid funeral plan where arrangements are made and the amount covers all or nearly all the costs and ancillary costs

Many people think that the state will help pay for their funeral when they die. Yet, only those receiving some form of benefit, and with low levels of savings, are considered for state assistance. Everyone else has to find the money themselves or rely on their family.

If you live a long while there may come a point when the premiums paid will exceed what would be paid out on death.

The lump sum paid out may be subject to inheritance tax unless the policy is written in trust.

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