The Difference Between Funeral Insurance and a Funeral Plan

December 11, 2020

Although not the most pleasant of topics, planning for your inevitable passing can save your loved ones from unnecessary stress and worries at an already stressful time. Here we explain what a funeral plan and funeral insurance are to help you to make the ideal choice for you and your loved ones.

When making decisions regarding what you want to happen after you pass away, it is important that you consider your wishes regarding the funeral you want.

Setting aside funds for your desired funeral will ensure that your wishes are met. Providing you with peace of mind, as well as alleviating the unexpected financial hit for loved ones.

The two most popular options for saving for your funeral are funeral insurance and funeral plans. However, without knowing the differences between the two, it can be difficult to determine which would be best for you.

What is funeral insurance?

You are likely to be familiar with other types of insurance, such as home and car insurance. Funeral insurance is not that different.

Funeral insurance is a way of covering the costs of a funeral service. Typically, you pay a monthly amount which goes towards a lump sum. This lump sum will be paid out to your next of kin or other specified persons in the event of your death.

The money they receive does not necessarily just have to be used for funeral costs; it can also be used for almost any related costs, such as settling bills and debts, costs related to your estate, and bank charges.

You can even allocate some of the money to be given as inheritance or donated to charities, but this amount will be subject to tax implications.

It is also worth bearing in mind that policies vary; some will only cover the funeral director’s bill, whereas others may pay for more, or even less.

If you opt for funeral insurance over a funeral plan, be sure to read the policy carefully, as some policies do not cover all costs. If this is the case, your loved ones will be left to pay the remaining balance not covered by the policy.

What is a funeral plan?

Prepare today to help your loved ones in the future with a funeral plan. Having a funeral pre-payment plan can provide you with peace of mind and help to ease the financial worry for your loved ones during an already difficult time.

The biggest advantage of a pre-paid funeral plan is that the cost is fixed so you pay today’s prices. Unlike with funeral insurance, the funeral costs are covered. No more funds will be required, even if funeral costs rise in the future.

Another benefit of a funeral plan is that there may be different payment options available, depending on the funeral plan provider, which means you could choose to spread the cost rather than paying for it all in one go.

The money is held securely and cannot be used for anything other than your funeral. This can help provide you with total peace of mind. It can contribute towards third-party costs, even if you do not opt for an all-inclusive plan.

Pre-paying for your funeral means that you can personalise your funeral, or you can choose a set plan. This means you have the option to alter your plans later if you wish. It also ensures that your funeral is carried out as per your wishes.

Established in 1920s, Craven Funeral Directors is an experienced family-run business offering a wide range of award-winning funeral pre-payment plans. Find out more about our funeral plans here or talk to a member of our team on 0151 228 3900.