The Difference Between Funeral Plans & Insurance
When someone passes away, it can be a big shock for those who are left behind; not only is the loss often heartbreaking, but planning a funeral is something that many often feel out of their depth with.
Financially, funeral planning is an expense that many don’t allow for, meaning not only do those left behind have to navigate the emotions of grief, but they also have to find the finances to cover the funeral cost itself.
However, there are some ways to make provisions for your loved ones for when you’re gone, so that your funeral cost is covered when the time comes. This is not only a great practical plan, but also a gift for those left behind that allows them to grieve a little more easily.
Funeral Plans And Funeral Insurance
Funeral plans and funeral insurance are two different ways to cover a funeral's cost.
Funeral plans are pre-paid plans that allow you to pay for your funeral in advance. Funeral insurance is a policy that will pay a lump sum when the policyholder passes away.
Funeral plans are a good option for those who know what they want for their funeral whilst they are still here. You will meet with your chosen funeral director, review the options available, and prepay the sum.
When the time comes, your family won’t have to pay for anything; everything is covered before you pass away. You can pre-pay for a funeral plan at any point in your life; many people choose this route to make it easier for their family members when their funeral is arranged.
Working with a funeral director means you have control over your funeral plans; you can share your personal wishes so that when it’s time to arrange your funeral, your loved ones can follow your guidance.
- What Is A Prepaid Funeral Plan And How To Choose One
- How Do I Choose A Prepaid Funeral Plan Provider?
Like most insurance policies, funeral insurance will pay your loved ones a lump sum when the time comes for them to plan your funeral.
You will make a set monthly payment so that when you pass away, your family can plan your funeral without any financial burden. Most policies allow you to customise how much you pay each month based on how much you want your family to receive when you die.
Higher payout amounts will have a higher monthly premium, whilst lower payouts will have a lower premium to reflect this.
When taking out funeral insurance, it is essential to see how long you must pay your policy before you can be paid out. For example, many policies have terms and conditions that state you must have paid your premiums for at least two years before the payout can be made.
Funeral Plans vs Funeral Insurance
There are pros and cons to both funeral plans and funeral insurance, and it is essential to opt for the choice that suits you best.
With funeral costs rising each year, a funeral plan is a good choice; once you have paid for your funeral, there is no remaining balance to pay. Even if the prices increase in the following years, your family will not be liable to pay any extra.
However, with funeral insurance, your policy amount is set and doesn’t fluctuate depending on price rises; your family will receive a set amount that may cover the funeral in full or may result in a shortfall, depending on what your policy pays out.
If an insurance payout covers the total funeral cost with some money left over, your family can do what they wish with the remaining cash. They also have the freedom to plan your funeral as they see fit.
With a funeral plan, the funeral is paid for in full, and plans can be made immediately.
With funeral insurance, your loved ones must make a claim and wait for it to be paid out before they can start planning the funeral.
Depending on whether your loved ones will have access to cash when you pass away, this can be a crucial component of deciding whether to purchase a funeral plan or funeral insurance.
We Can Help
At Legacy of Lives, we offer a free funeral planning tool to make such a difficult time a little bit easier.