Will my life insurance cover the cost of my funeral?

8 minutes

It's always tough to think about what will happen after you pass away. But from your funeral costs to insurance, some things are worth planning for.

Does life insurance cover funeral costs?

  • Life insurance for your funeral
  • How much does a funeral cost?
  • Does life insurance cover funeral costs?
  • How do I pay for a funeral with insurance?

Life insurance can ease the financial strain on your loved ones at an emotionally difficult time. A lump-sum payout after you’re gone could save them from financial hardship, covering mortgage costs, debts and other household expenses.

And the benefits don’t end there. Funeral coverage is also offered by some life insurance policies with a payout further lifting the pressure on your family. Read on to discover the typical costs of a burial and cremation, as well as how to use life insurance for funeral expenses, and the other options that are available.

Life insurance for your funeral

Death can be a sensitive topic to discuss. But funeral planning is one of the most immediate issues your family will have to grapple with after you’re gone. By giving us the chance to pay respects to a loved one and celebrate their life, funerals are emotionally demanding events. Their financial impact can also pose a headache when you add up things like funeral directors’ fees, a headstone and even catering. This is especially true if the person who’s passed on was the main financial provider for a household.

As a result, preparing for the costs of your ceremony can make a tough period that little bit smoother for those you leave behind. The good news is you have a range of options to support your family when the time comes. Life insurance and specialist funeral cover are the main products to think about.

How much does a funeral cost?

On average, the cost for a basic burial is £4,794 and £1,511 for a direct cremation, according to the government’s MoneyHelper service [1]. However, the exact price will vary depending on where you live, and it could be lower if you don’t use a funeral director.

Just remember that burial, cremation and funeral director fees may only be the tip of the iceberg when budgeting for your ceremony. For example, common funeral extras include:

  • Booking catering and a venue for the wake.
  • Flowers.
  • A memorial, such as a headstone.
  • A funeral or death notice.
  • An urn for your ashes.

Ultimately, no two funerals will cost the same. The type of ceremony, its scale, and the extras you choose will all influence the final price. Whatever you decide, it’s important to inform your loved ones of your wishes before you pass away. This will ensure you’re all on the same page and help everyone estimate and budget for the key expenses.

Does life insurance cover funeral costs?

Funeral coverage is something your life insurance policy can help cover. Life insurance pays your beneficiaries a lump sum if the worst happens, which can normally be spent however they wish. That means it can cover everything from bills, debts and mortgage payments through to day-to-day family expenses – and funeral costs.

The ways life insurance can help

A life insurance payout used for funeral expenses might provide vital funds to your loved ones. It could save them the difficulty of finding thousands of pounds at very short notice – and from being forced to take on more debt. It may also come in handy even if you’ve built up savings specifically towards your funeral. That’s because your bank account will likely be frozen once you pass away, and any savings won’t be unlocked until your will is executed.

A lump-sum life insurance payout means funeral cover is effectively built into your policy. However, more specialist products are also available to help you prepare, including funeral payment plans.

Considering life insurance?

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How do I pay for a funeral with insurance?

You’ll have two main options when covering your funeral cost with insurance:

  1. A lump sum from a life insurance policy. Choose from a term life policy, where you’re covered for a fixed period, or a whole life agreement, which stays in place until you pass away. Either way, your beneficiaries should receive a lump sum that can contribute as much or as little as they want to your funeral expenses. It may be worth having a chat about how much of this payout should be put towards your funeral.
  2. A specific funeral cover policy. Also known as funeral payment plans, these products allow you to pay for the costs of your ceremony in advance. On the one hand, they can ease the financial burden for your loved ones. On the other, the money you’ve paid in can only be spent on your funeral – unlike life insurance payouts. 

FAQs – funerals and life insurance

What’s the difference between a funeral plan and life insurance?

The main difference between funeral plans and life insurance is what they cover your loved ones for. As the name suggests, a funeral cover policy only pays towards your funeral costs. In contrast, life insurance payouts can generally be spent however your beneficiaries wish. They can cover funeral fees, but can also be used for other expenses, such as mortgage payments and other debts or living costs.

When does a life insurance payment pay out after death?

The time when a life insurance payout is made varies depending on your circumstances and the provider. For example, a claim may need to be verified, or medical evidence might have to be collected. However, once the payout has been agreed, it can often be made within a matter of days.

Is the beneficiary of life insurance responsible for funeral costs?

No, a life insurance beneficiary isn’t usually obliged to spend their lump sum on funeral costs. Instead, they should be able to spend the money however they want, supporting their household at a difficult time. Other common uses of life insurance payouts can include mortgage bills and debt repayments.

Learn more about the benefits of life insurance by getting a quote with LV=.



[1] The MoneyHelper, How much does a funeral cost?