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Doesn’t my life insurance product cover funeral expenses?

Doesn’t my life insurance product cover funeral expenses?


When a life insurance policy pays out on your death, those you leave behind will receive a lump sum cash payment that is designed to ease the blow of the loss of your income. This cash sum may used for any number of purposes such as:

  • To clear any outstanding mortgage;
  • To clear other debts such as loan and credit card bills;
  • To keep your family in the lifestyle they have become accustomed to;
  • And so on… (eg. to cover university fees).

The amount your family receive could be used to pay for your funeral – or the money can be used however they wish.

So, yes, in its simplest form, your life insurance could be used to cover your funeral expenses.

There are exclusions though …

Firstly, it depends on the type of life insurance you have. Some life insurance policies are tied to the term of your mortgage (these may be known as mortgage life insurance or decreasing term insurance). Once your mortgage ends, so does your life cover meaning your loved ones will get nothing.

So, if you are intending for your family to use your life insurance monies to finance your funeral, do check to see if your policy covers you for the whole of your life, or stops when you reach a certain age.

If it is the latter and you survive to that age, you may need to think about putting other plans in place to pay for your funeral.

If it is the former, then do check that the amount your family is likely to receive in the event of your death covers all your financial commitments (such as debts) before committing some for your funeral.

Why choose a funeral plan?

A funeral plan is a standalone arrangement that pre-pays for your funeral, so you can feel confident that when you do die, your family will have no financial worries about finding the money to say good bye. You can also specify your personal requirements if you want to, so you know that everything will be carried out to your wishes.

Many people find a funeral plan a useful product to have. Payments can be spread over 12-60 months (sometimes longer) or you make a one-off (slightly cheaper) payment.

You also get the advantage of a fixed price, so while inflation may affect funeral prices over time, your funeral costs will remain the same.

You can get an idea of costs by carrying out a funeral plans comparison.

Funeral insurance

Another option some people opt for are Over 50s plans (also referred to as funeral insurance).

Unlike funeral plans which pre-pay for your funeral and allow you to plan according to your wishes, funeral insurance policies provide a lump sum payment on your death.

The amount will typically be around £3,000-£7,000 depending on the level of cover you choose (unlike a mortgage life insurance policy that is designed to pay off your debts) and the age at which you die.

Your family will still need to arrange the funeral and deal with the funeral directors etc, and there is no guarantee that the amount they receive will cover the costs associated with your funeral.

As you can see, there are a number of considerations that you need to take on board when funeral planning. If you are still unsure as to what solution is the most appropriate for you, then seeking independent help and advice may be your next step.