Burial Insurance – Who will pay for your funeral?

Statistics released by AXA Sun Life in 2007 showed the average cost of a funeral to be £2811 and rising at an average rate of 7% per year!

For many elderly people the need to raise this kind of money to pay for there partners funeral is simply untenable but nor do they wish to pass the fees onto their children.

As such burial insurance, a term for life insurance designed to pay a lump sum to cover funeral expenses, is becoming increasing important to relieve the burden from other family members.

How much will it payout?

Different people will select policies with different values but most people aim to cover between £4000 and £5000 payout in order to ensure the funeral is fully covered. Choices are largely unlimited and you are free to choose payouts which are far higher than the average policy if you are happy to accept higher premiums.

Length of Cover

The length you are protected depends on whether you choose term life insurance or whole of life insurance. The term life option covers you for a set number of years (decided by you) and will pay out if you die at any time during those years. A whole of life plan, on the other hand, generally comes with higher premiums but will continue to protect you until the day you die no matter how long that may be (assuming you continue to pay the premiums). In some cases, the insurance company will even take over paying your premiums once you reach the ripe age of 100!

Joint or Single Burial Insurance Policies

If you are looking to cover both your own funeral and that of your partner you have the choice either choosing a joint policy or two single policies.

The downside of the joint policy is that whilst it may work out slightly cheaper, once the first person has died the policy will cease and a payout will not be made for the second death. This effectively makes joint policies a bad idea for the purposes of funeral insurance.

Inheritance Tax and Probate

With any life insurance policy there is the problem of inheritance tax and probate. Burial insurance is no exception and whilst no inheritance tax is due if the payout is made to your spouse, if the payout is made to your children the tax will be due.

The solution to this problem is through the writing of your policy into a trust. Writing your policy into a trust allows you to nominate who the payout should be made to and because of this your payout does not enter your estate and is therefore not eligible for inheritance tax nor the time delays of probate.

Our advisers will happily write your policy into a trust free of charge, a service which a solicitor would normally charge about £300 for!

Premium Increases

Many people worry that their premiums will increase over time but with all of our burial insurance policies your premiums are guaranteed throughout the term of your policy. The price won't ever go up as a result of the insurance company increasing prices or because of any changes in your state of health.

To Conclude

Burial Insurance is an important part of planning for your final days. It is something that can provide immense relief for your family and leave them to mourn your passing instead of worrying about how to pay for your arrangements. The cover need not cost a large amount and the financial protection and peace of mind provided as invaluable.