Planning ahead: should you choose life insurance or a funeral plan?
Looking at life insurance or funeral plans might not sound like the most pleasant way to spend a free afternoon. But it could be one of the most thoughtful things you do for the loved ones you leave behind. With the average cost of a traditional, attended funeral now at £4,510 and expected to rise by another 17% by 2030*, funeral costs are worth thinking about.
This guide will help you understand your options, what the difference between life insurance and funeral plans is, and which one will provide the security that best suits your needs.
Comparing the two: key differences at a glance
| With life insurance... | With a funeral plan... | |
|---|---|---|
| Protection against rising costs | ...you receive a cash payout of a set amount at the time you pass away. Remember, funeral costs may have risen. | ...the funeral director's services included in the plan are fixed at today's prices. Some plan types cover third party costs, while others provide a contribution. |
| Who makes the funeral arrangements? | ...the cost of the funeral may be covered by the fixed cash sum, but all funeral arrangements will have to be made at the time by loved ones. | ...all the plan holder's wishes are recorded, so loved ones know exactly what they wanted. You also have the support of the funeral director named in the plan. |
| Flexibility | ...your loved ones will have full flexibility to make the funeral arrangements. They may even have enough left over to use for other purposes. | ...you'll be able to make a record of your wishes for your loved ones, so they'll know what to do when the time comes. |
| Access to funds | ...accessing the money left by insurance can be delayed by probate. | ...the pre-paid funeral plan is ready the moment it's needed. |
| Health checks | ...you'll undergo a health check before the insurance can be finalised. | ...Golden Charter funeral plans are available to all UK residents, regardless of age or state of health. |
How a pre-paid funeral plan works
How your money is protected in a funeral plan
A pre-paid funeral plan works by putting your plan payments in a whole-of-life policy or a secure trust fund that keeps your money safe until the time you pass away. All funeral plans have been regulated by the Financial Conduct Authority since 2022, so everyone who buys a plan also has access to the Financial Ombudsman Service. What’s more, funeral plan payments are backed by the Financial Services Compensation Scheme (FSCS), in case the plan provider fails.
At Golden Charter, we hold our customers’ plan payments in the Golden Charter Trust. The Trust is looked after by a Board of Trustees, which is completely independent of Golden Charter. Their role is to hold our customers’ payments and ensure that the funeral director services in their plans can be paid for at the time they’re needed, however far into the future that may be*. Then, when the plan holder passes away, their loved ones call the funeral director named in the plan to start the funeral arrangements.
How a funeral plan works: the role of the funeral director
One key difference between life insurance and funeral plans is that a funeral plan includes support from a funeral director. With Golden Charter funeral plans, you’ll be supported by a local funeral director, one of the more than 3,000 partners who make up our UK-wide network*. Many of these are local businesses who have been taking care of their surrounding communities for years, and will be on hand to offer expert care when it’s needed.
You won’t have to worry about deciding on funeral arrangements at an already difficult time; the funeral director will have all the plan details and will start putting things in motion from the first call.
But what needs to happen before that first call? To break down even further how our funeral plans work, we’ve created the guide below.
How does a Golden Charter funeral plan work? A step-by-step guide
- Decide what you want your funeral to look like.
- Buy a plan online, by calling us direct, or through your local, independent Golden Charter funeral director partner.
- You’ll receive your funeral plan documents within 30 days of buying your plan.
- Your payments will be transferred to the independent Golden Charter Trust and looked after until the money is needed for the funeral.
- We will send you a customer statement every 3 years to ensure all your details are up to date. Changes can be made while your plan is active. For example, updating your address if you move.
- When the time comes, your next of kin contacts the funeral director named in your plan documents. They will work together with us at Golden Charter to support your loved ones and make sure everything is taken care of, exactly as planned.
The hardest part about pre-paid funeral planning is thinking about what you want for your funeral. But once the hard decisions have been made, it can be quite a simple process. And you can talk to the funeral director about any questions you may have, even before you take the plan out. After all, they’re there to help.
Understanding life insurance for funerals
What to consider with a cash payout
A fixed cash payout at the time of death is a good, simple and flexible solution to some people’s end-of-life planning needs. A recent report states that most customers are motivated to take out over 50s life cover to fund their funeral costs*.
But, while that payout might cover funeral costs, keep in mind that life insurance or over 50s insurance doesn’t account for inflation. For example, recent research shows that today, the average traditional, attended funeral costs £4,510. The same research predicts funeral costs will rise by 17% to £5,276 by 2030*.
That means while a £5,000 policy payout might look good today, that same £5,000 will only cover part of the funeral costs if the price of funerals keeps increasing as predicted in the next five years and beyond.
Where life insurance shines
Life insurance can be useful if you want to leave a cash sum for your family. They can use it in the way that best suits them, whether that is for funeral costs or other expenses. The trade-off is that your loved ones may still need to arrange the funeral and make decisions at a difficult time.
Understanding costs and cover
What makes up the cost of a funeral in the UK?
Funeral costs in the UK are usually split into three parts:
The funeral director’s services.
- Professional services by the funeral director
- Making all arrangements for the funeral
- Caring for the deceased prior to the funeral
- Transportation
- The coffin
Third party costs.
- Cremation or burial fees
- The opening of a new burial plot (if needed)
- The fees for the religious official, celebrant or humanist
Optional extras.
- Flowers
- Orders of service
- Venue and catering costs for a wake
What is covered in a Golden Charter funeral plan?
Funeral director services
Golden Charter funeral plans fix the cost of the funeral director services included in the plan at today’s prices. This avoids any future increase in the cost of these services. Once your plan is paid for*, the funeral director services are guaranteed to be taken care of, no matter how far in the future they’re needed.
Third party costs
Third party costs are also known as ‘disbursements’. These are costs for services that are not provided by the funeral director, such as cremation or burial fees, so they cannot be fixed in the same way as the funeral director services included in the plan.
To help with these costs, our Standard and Select plans include an allowance towards them. This allowance gives your loved ones additional support with important services like burial and cremation fees, alongside the guarantee that the funeral director services included in the plan will be taken care of once the plan is paid for*. If the third party costs at the time of the funeral are higher than the allowance, the difference will need to be paid.
Our Direct Cremation Plan works slightly differently. Rather than including an allowance to cover third party costs, this plan is fully guaranteed to cover all costs, including third party costs like cremation fees.
Optional extras
Setting down your wishes in a funeral plan can take the guesswork out of what extras you would like. Research shows that when even some of your wishes are known, families save an average of £335 on these send-off costs* as they’re not spending money on things their loved one didn’t want.
Final thoughts on cover
The exact cover depends on the plan you choose, so it’s important to compare the details before you buy.
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Important note: Always check what's included in a plan before buying |
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| If a cost is fully guaranteed it means that it's fully covered, with no more to pay once the plan is paid for2. | If a cost has an allowance towards it, it means that it will be partially covered. |
Finding the right balance for your family
Ultimately, there’s no right or wrong way when it comes to end-of-life planning. If you’re comparing life insurance and funeral plans, the best choice depends on what matters most to you.
However, if you’re interested in taking control of funeral planning, both for your own peace of mind and your family’s, we’re here to help you.
Download our free brochure to learn more about funeral planning, or simply speak to your local, independent Golden Charter funeral director partner. They can be found wherever you see our seal.
