What Insurance Covers Funeral Costs?

When we find ourselves needing to arrange a funeral at short notice, the cost is often one of the first things on our mind. Whether we are dealing with the unexpected death of a loved one, or wondering how to cope with the death of a parent, we might be wondering “what insurance covers funeral costs?” or how we can access their financial information to help pay for a funeral. Of course, you may also be planning ahead for your own funeral, and considering your various options, too. In this article, we are going to answer the question “what insurance covers funeral costs?” and many other connected questions.

Whatever has brought you to this page – whether you need to arrange a direct cremation for a loved one in the here and now, or you’re looking for a prepaid funeral plan for the future – we just want to acknowledge the possible difficulty or emotional complexity of your situation. Aura is ready to offer its family-run funeral services to any who need them.

What does funeral insurance cover?

‘Funeral insurance’, such as over-50s life insurance or funeral cover insurance is a popular choice in the UK by those looking to make sure that their funeral costs are covered in advance of their death and funeral. For some, this may only relate to the basic fees involved with a funeral, where others hope that it will stretch further to cover additional expenses. There are also certain circumstances in which funeral insurance may fail to cover the cost of a funeral.

In general, in the case of over-50s life insurance, a lump-sum will be paid out upon the redemption of the policy, which could be used to pay for some or all of the policy holder’s funeral costs. Whereas, with funeral cover insurance, the policy holder will have specified in advance with the provider what sort of funeral they want, and the insurance provider undertakes to pay the funeral provider some or all of the cost of the funeral once the policy holder has died. In effect, funeral cover insurance is a bit like a prepaid funeral plan, only it is backed by a life-insurance provider, rather than a trust.

Direct funeral costs

Both examples of funeral insurance policies can be used to cover basic funeral or cremation costs. These may include typical fees associated with funerals, such as cremation or burial costs; funeral director fees; the pre-funeral care of the person who has died, such as washing and embalming; or their transportation to the crematorium or burial site on the day. Depending on the type of funeral the family wants to opt for, and the type of funeral insurance policy they have, it may also need to cover more expensive fees, such as burial-plot rental, and headstone purchase.

Additional expenses

Depending on the size of the payout, a funeral insurance policy could also cover additional expenses. For example, if a family wants to arrange an attended direct cremation or burial, then they may want to use the payout for celebrant or religious minister fees, not to mention floral tributes to the person who has died, or a limousine and funeral procession for the family.

It’s very common, depending on different beliefs on death and funerals, for some sort of wake or end-of-life celebration to follow the funeral ceremony itself. Depending on what sort of thing the family would like to do, these can also be expensive additional extras.

Exclusions to consider

It’s very important to bear in mind, as noted by impartial consumer experts like Martin Lewis, that funeral insurance, like over-50s life insurance coverage, may not apply in certain situations. For example, the insurance provider may not provide cover in instances where the policy holder has died by suicide.

Whilst it’s not normally the case, you may need to undergo a medical before you are accepted; if you declare that, for example, you are not a smoker, but a post-mortem finds that you were, again this may invalidate your policy. 

If you are considering a funeral insurance policy, make sure you are aware of the exclusions and exceptional circumstances where the policy may no longer apply.

How to choose the right funeral insurance policy

If you are interested in paying for your funeral with a funeral insurance policy, you’ll need to make sure you are getting the best deal. Assess your coverage needs, and compare the different providers out there to see which one can help you meet those needs more closely. You’ll also need to make sure you understand the payment and beneficiary terms of your policy. Consider starting a funeral checklist in order to keep your research organised.

Assessing coverage needs

Because funeral insurance policies do not lock in current funeral prices when you start paying, you will need to be aware of typical burial and direct cremation prices in your area of the UK before making your decision. You will also need to be aware of how quickly funeral costs are rising, and of how much money your policy is likely to pay out when the time comes. This will give you a rough idea of how to balance your needs against the demands of the economy when the time comes for your funeral. 

According to SunLife, funeral prices have increased by 126% over a 20-year period, so this is an important consideration to make. They also say that the average cost of a traditional funeral in the UK last year was £4,141, but you could pay significantly less or more than that depending on what kind of funeral you want and where you live. Once you’ve weighed up the benefits and costs of cremation vs burial, and gotten a sense of how your local funeral costs stack up against those of the rest of the UK, you’ll have a clearer idea of how much coverage a life insurance policy will get you.

Comparing providers

As with any important financial decision, make sure to compare the different providers that are out there. You might find differences in premium price, or coverage limits that are more relevant to your needs. And there may also be variance in how each provider pays out.

Price isn’t necessarily the only factor you will want to consider. The financial stability and trust rating of the company are equally important, as, ultimately, they are the ones you are trusting to provide the money for your funeral. You can compare the Trustpilot rating, for example, of each company to see what previous customers have had to say about their experience. Each company may have an awards and accreditations section of their website that shows you different reasons to put your trust in them.

Understanding payment and beneficiary terms

With over-50’s life insurance, you will normally need to select someone to be your policy beneficiary. That’s the person who will use your Death Certificate to claim under the policy when the time comes, and they are normally your next-of-kin. Once they have received the lump-sum payout from your policy, the beneficiary will be responsible for utilising these funds as per your funeral wishes.

There are also different payment terms that you can select from which have their own costs and benefits. For instance, a whole life term, as long as you keep paying monthly premiums, will give you life insurance for your whole life. Fixed-term life insurance, on the other hand, gives you life insurance coverage for a set period of time, e.g., 10, 15 or 20 years. The monthly premium for this type of coverage tends to be lower because the risk of the insurer needing to payout is lower. But when the insurance term ends, there’s no payout; you simply need to start a new one if you want to remain covered.

Prepaid funeral plans

The main alternative to over-50s life insurance as a means of paying for your own future funeral is a prepaid funeral plan; this is sometimes referred to as “pre-need funeral insurance”, although, as it’s not actually an insurance product, this name isn’t as appropriate.

What are prepaid funeral plans?

The easiest way to understand what a funeral plan is, is to understand what it does: to put it simply, a funeral plan allows you to specify your funeral wishes – that is, what kind of funeral you would like to have – and to pay for it all in advance of the day itself. Unlike over-50s life insurance, your family doesn’t receive a cash lump-sum when you die. Instead, with an Aura prepaid funeral plan, they let us know that the time has come to activate your plan, at which point we withdraw your money from our trust to pay for everything you’ve specified. 

Benefits of prepaid plans

There are numerous benefits available to you with a prepaid funeral plan compared to funeral insurance, as you will see from the comparison table below. With an Aura funeral plan, it is guaranteed that your funeral will be completely paid for; this is not the case with funeral insurance.

Certainty

With an Aura funeral plan, it is guaranteed that your funeral will be completely paid for; this is not the case with funeral insurance. With the latter option, you may get a lump-sum which the family will need to conserve and spend wisely in order to cover funeral costs, or they may otherwise find that they need to make up the difference between what the policy pays to a funeral director, and the overall cost of the funeral. In many cases, depending on how old you were when you started paying in and how old you were when you died, the payout may be worth less than what you’ve paid in. 

When you buy an Aura funeral plan, we put your money aside in our secure, independently managed trust. The trust protects it from the potential impact of inflation and rising funeral costs, meaning you and your family will have peace of mind that everything is taken care of. This makes everything much easier for your family, particularly if they are struggling to cope with the death of a parent, or to deal with the unexpected death of a loved one.

Flexibility

With Aura, you can change your mind whenever you like. Amend – or even fully cancel – your funeral plan at any time, for any reason, and you’ll only pay extra if you are upgrading. When cancelling, you’ll receive a full refund of every penny you’ve paid us, meaning you can then transfer to another provider or method altogether as you wish. On the other hand, with a funeral insurance policy, if you miss even one premium payment – regardless of whether you’ve successfully paid in for decades – you may no longer be covered and the whole policy may be void; all the money you’ve paid up until that point is gone and can’t be refunded. The same goes for if you’d like to cancel your policy and move to a different provider.

Simplicity

When you have a funeral plan in place, your family can easily set the wheels in motion for organising your funeral by simply contacting the plan provider. They’ll then start to arrange and pay for everything as planned. But if you intend to use a funeral insurance policy, your family will need to contact the provider with various pieces of documentation before they will pay out. They will likely want to see the cause of death on your Death Certificate in order to verify it. When the ability to pay for the funeral rests on these overlapping administrative procedures, it can cause unnecessary stress and hassle for your family, when they will already be trying to cope with their grief. There is none of this hassle with a prepaid funeral plan.

Common worries about prepaid funeral plans

After some high-profile industry turmoil in recent years, there are some people who doubt the security of prepaid funeral plans. Indeed, one of the first things people tend to ask Aura is “are funeral plans safe?”. Now that funeral-plan providers need to be fully regulated by the FCA, there are stringent requirements in place for the protection of your money. All of our plans are held in our secure, independently managed trust, and they are all protected by the FSCS, giving your money multiple layers of security. We were also proud award winners at the 2024 International Compliance Association (ICA) Awards, highlighting our exceptional processes to keep your money safe.

The good news is that, through our FCA-regulation, even in the highly unlikely scenario where we wouldn’t be able to deliver on your plan, thanks to our trust, we would be able to transfer your plan to another provider who is able, or issue you a full refund. As we say, this would be highly unlikely to be necessary, but it gives you peace of mind to know that there are provisions in place for every eventuality.

Choosing a prepaid funeral plan

Much like with finding a life insurance provider, the best way to find the right funeral plan provider is to assess your options and see what’s out there. It will depend on the kind of funeral you’re looking for, and the kind of customer service you’d like your family to receive. Depending on whether you’d like a burial or a cremation, different things will be included in your plan; for instance, a funeral plan for a burial (or pre-need funeral insurance) very often doesn’t include the cost of expensive items like the headstone. Becoming more acquainted with the different options will help you to understand roughly how much funeral plans cost in general. Check to make sure the provider you’re interested in is authorised by searching the website of the FCA.

You can compare Aura funeral plans with other leading providers by viewing the table below, or by reading the linked article. Aura is the top-rated ‘Cremation Services’ provider in the UK on Trustpilot, with 4.9/5 stars. We are very proud of the recognition we’ve earned from the families who’ve entrusted themselves to our care, as it shows they’ve appreciated our compassionate and caring approach to funeral planning. 

Alternatives to funeral insurance

There are a couple of different ways that you can pay for your funeral besides relying on funeral insurance, like over-50’s life insurance. For instance, many people intend for their families to rely on their personal savings to pay their funeral costs, where others may turn to the government for assistance if they meet the eligibility criteria.

Personal savings

Some may feel that they don’t need to worry too much about providing a way for their family to pay for their funeral expenses when they are no longer here. But, even if you have adequate personal savings to resist the possible impact of inflation and of potential funeral price increases, bear in mind that it won’t be as simple as your family making a bank transfer. The executor of your will will need to apply for probate in order to gain the legal right to administer your estate. Your bank will also likely require proof of your death in the form of your Death Certificate before they can grant access to your family, which can cause delays at a difficult time.

Government or state assistance

The government can offer some forms of support through various schemes for those who are eligible. The Department of Work and Pensions (DWP) has two programs helping those in need: the Bereavement Support Payment and the Funeral Expenses Payment. Your family may also be able to gain access to your bank or building society account in order to pay your funeral costs directly from your funds there; this can be done through the Grant of Probate scheme. 

The support payments, generally, have an eligibility criteria; you may need to be the next-of-kin of the person who has died, or the next-of-kin’s partner, and you will likely already need to be claiming some form of benefit payment from the state. If you live in Scotland, you can apply for the funeral support payment on the Scottish government website. 

Furthermore, veterans of the British military may be eligible for burial benefits and other forms of funeral support; you can learn more about what to do when a veteran dies on the UK government website.

Help and resources for funeral planning

Planning your own funeral can be a complicated matter, but there are lots of avenues out there for support. From working with funeral directors, to non-profit or charitable organisations, and online comparison tools, there are lots of different ways out there to get informed. 

Working with funeral directors

Whether you’re looking to arrange a direct cremation or a fully attended, traditional burial with all the extras, funeral directors are there to help. Aura’s industry-leading Angel Team are experts in funeral arranging who can tailor their support to your specific needs. They understand that, for some people, the admin and paperwork is a welcome distraction from the emotional shock of losing someone, whereas others may want a little more support. 

The Angels can offer as much or as little support with this as you’d like, leading you by the hand through the difficult experience of arranging a low-cost funeral. They can advise on what to do when someone dies, whether in hospital, a care home, or without a will. And they can even provide support with celebration-of-life planning, too.

Non-profit organisations and charities

There are charities and non-profit organisations out there that can sign-post to useful resources, and possibly contribute to the cost of a funeral. For instance, the Quaker Social Action charity can help to point you to funding opportunities, whether through the government or industry-specific charities. 

There are also charities that can help with the grieving aspect of things. For instance, Sue Ryder has recommendations on things like joining local death cafes, which is a great way to learn how to talk about death and dying with others who are grieving near you.  

Online tools and comparison sites

More and more people are turning to online tools like crowdfunding and comparison sites to get more informed and to help them raise the money they need to pay rising funeral costs. Websites like JustGiving and GoFundMe can allow you to create a shareable link that you can distribute across your social media networks, perhaps whilst announcing a death to friends and family online. 

If you’re looking to compare direct cremation providers, you can use consumer comparison websites to present all the relevant metrics and data in one place, which should help you to narrow down your funeral options.

Aura is ready to help

We hope this article has been helpful for you, and answered any questions you might have had about over-50s life insurance and prepaid funeral plans. Of course, if it raises new questions for you, please feel free to give us a call; we’d be happy to help talk you through your options. Alternatively, why not download our funeral plan brochure for a bit more information?