Losing a loved one is one of life’s most difficult experiences. Amid the grief, the last thing a family needs is the additional stress of worrying about money. Yet, with the cost of a basic funeral now running into thousands of pounds, this is an unfortunate reality for many. Planning ahead is not about being morbid; it's an act of care, a final gift to ensure your family can say goodbye without facing a financial crisis.
Life insurance offers a practical and affordable solution to cover these final expenses, providing a tax-free lump sum to your loved ones precisely when they need it most. But which type of policy is best? And which insurers offer the most value in 2025? This comprehensive guide will explore everything you need to know about choosing the right life insurance to cover funeral costs, giving you the clarity and confidence to make an informed decision.
WeCovr explores which insurers offer affordable funeral benefit policies
As expert brokers in the UK protection market, we at WeCovr spend our days navigating the complexities of life insurance, critical illness cover, and income protection. Our mission is to demystify the jargon and match our clients with the policy that truly fits their needs and budget. A significant part of this involves helping people plan for end-of-life expenses.
In this guide, we will delve into the specific products designed to help with funeral costs. We’ll compare the different types of life insurance, from simple Over 50s plans to more comprehensive Term and Whole of Life policies. We will also shine a spotlight on a valuable feature that many are unaware of: the Funeral Benefit Option. This is an arrangement where insurers partner with national funeral directors to offer a contribution towards the cost of your funeral, often adding hundreds of pounds to your policy's value. We'll examine which major UK insurers offer this benefit and how it works in practice.
The Soaring Cost of Saying Goodbye: Why Plan Ahead?
The cost of dying in the UK has been steadily increasing for years, far outpacing general inflation. This rise is driven by increases in funeral director fees, council burial and cremation charges, and the costs of optional extras like memorials and wakes.
According to the latest SunLife Cost of Dying Report, one of the most respected annual studies on the subject, the average cost of a basic funeral in the UK is now a staggering figure. While final 2025 figures are compiled throughout the year, projections based on recent trends suggest the average cost will continue its upward trajectory.
Let's break down the typical expenses:
- Funeral Director’s Fees: This is the largest component, covering professional services, collection and care of the deceased, viewings, hearse, and staff on the day.
- Third-Party Costs (Disbursements): These are fees the funeral director pays on your behalf. They include:
- Cremation or burial fees (these vary significantly by local authority).
- Doctor's fees for the cremation certificate.
- Minister or celebrant’s fee.
- Discretionary Costs: These are the optional extras that make a funeral personal but can add thousands to the final bill. They include the wake or reception, flowers, memorial headstone, order of service sheets, and death notices.
To illustrate the regional differences, here’s a look at the estimated average costs for a basic funeral across the UK.
UK Region | Average Cost (Cremation) | Average Cost (Burial) |
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London | £5,100 | £7,500 |
South East England | £4,650 | £6,800 |
Scotland | £3,900 | £4,900 |
North West England | £3,850 | £4,800 |
Wales | £3,800 | £4,700 |
Northern Ireland | £3,500 | £4,100 |
UK Average | £4,150 | £5,300 |
Source: Estimates based on 2024 data from SunLife and other market analysts, projected for 2025. Actual costs will vary.
Faced with a bill of this size, many families are forced to take on debt, use savings meant for other goals, or even sell belongings. This financial strain compounds the emotional distress of bereavement. By putting a plan in place, you remove this burden, allowing your family to focus on grieving and celebrating your life.
Life Insurance for Funerals: Understanding Your Options
When people talk about "funeral insurance," they are typically referring to a life insurance policy taken out with the specific intention of covering these costs. The policy pays out a fixed cash sum upon your death, which your beneficiaries can use as they see fit. This gives them the flexibility to pay for the funeral, settle any small outstanding bills, or simply have a financial cushion during a difficult time.
There are three main types of life insurance policies commonly used for this purpose.
1. Over 50s Life Insurance
As the name suggests, this is a policy designed for people aged 50 and over (typically up to 80 or 85).
- How it works: You pay a fixed monthly premium for the rest of your life (or until a certain age, e.g., 90). In return, the policy guarantees to pay out a fixed lump sum when you die.
- Key Feature: Acceptance is guaranteed. There are no medical questions or examinations. As long as you are a UK resident within the age bracket, you will be accepted.
- The Catch: Most plans have a "waiting period" of 12 or 24 months. If you die from natural causes during this period, the policy won't pay the full lump sum. Instead, it will refund the premiums you've paid, often with a small amount of interest (e.g., 1.5 times the premiums paid). If death is accidental, the full sum is usually paid from day one.
Best for: Individuals in their 50s, 60s, or 70s who may have pre-existing health conditions that would make other types of insurance expensive or unobtainable. It's a simple, hassle-free way to secure a guaranteed payout for funeral costs.
2. Term Life Insurance
This is the most common and often most affordable type of life insurance, especially for those who are younger and in good health.
- How it works: You choose a lump sum amount (the "sum assured") and a period of time (the "term"). You are covered for that term, and if you die within it, the policy pays out. If you survive the term, the policy ends, and you get nothing back.
- Key Feature: It is medically underwritten. You will be asked questions about your health, lifestyle (e.g., smoking, drinking), and family medical history. This allows the insurer to offer a premium that reflects your individual risk.
- To cover funeral costs: You would typically choose a term that runs to a high age, such as 90. This is often called "Term to 90". For a relatively small sum assured (e.g., £10,000 - £15,000), premiums can be very competitive.
Best for: Healthy individuals under 65 who want a cost-effective way to secure a lump sum. It can provide a much larger amount of cover for a lower premium compared to an Over 50s plan.
3. Whole of Life Insurance
This is a more comprehensive and expensive type of cover.
- How it works: Similar to an Over 50s plan, this policy covers you for your entire life and guarantees to pay out whenever you die. However, it is fully medically underwritten, just like term insurance.
- Key Feature: The guaranteed payout and lifelong cover make it a powerful tool not just for funeral costs but also for Inheritance Tax (IHT) planning. The payout can be used to settle a potential IHT bill on your estate.
- The Cost: Because the payout is guaranteed, premiums are significantly higher than for term insurance.
Best for: Wealthier individuals looking to leave a guaranteed legacy or cover a large, expected IHT liability. For purely covering funeral costs, it can be overkill unless other options are unsuitable.
Comparison of Life Insurance Options for Funeral Costs
Feature | Over 50s Life Insurance | Term Life Insurance | Whole of Life Insurance |
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Cover Duration | Whole of life | Fixed term (e.g., to age 90) | Whole of life |
Payout | Guaranteed (after waiting period) | Only if you die within the term | Guaranteed |
Medical Questions | No | Yes | Yes |
Premiums | Fixed for life | Fixed for the term | Can be reviewable or guaranteed |
Cost | Moderate | Low (when young/healthy) | High |
Best For | Simple, guaranteed acceptance | Cost-effective cover for a set period | Guaranteed legacy & IHT planning |
A Closer Look: The Funeral Benefit Option
This is a key feature that adds significant value to policies aimed at covering funeral costs. Several major UK insurers have partnered with large, national funeral director firms (like Dignity and Co-op Funeralcare) to offer a Funeral Benefit Option or Funeral Contribution.
How does it work?
- You take out a life insurance policy (usually an Over 50s plan, but sometimes available on other policies) with an insurer that offers this benefit.
- When you pass away, your beneficiaries contact the insurer to make a claim.
- The insurer will offer them the choice of taking the cash payout or using their partner funeral director.
- If they choose the partner funeral director, the insurer pays the policy proceeds directly to them. Crucially, the insurer also adds a bonus contribution—typically between £250 and £350—towards the funeral costs.
Example:
Jean has an Over 50s policy with a £5,000 sum assured and a £300 funeral benefit option. When she passes away, her son David has two choices:
- Option A: Take the £5,000 cash and arrange a funeral with a local, independent director.
- Option B: Use the insurer's partner funeral director. The insurer pays the £5,000 to the director and adds their own £300 contribution. David now has £5,300 to put towards the funeral bill.
Pros:
- Extra Money: The contribution is a welcome bonus that can help cover rising costs.
- Simplicity: It can simplify arrangements at a stressful time, as the insurer and funeral director handle the payment directly.
Cons:
- Lack of Choice: You are tied to a specific national chain, which may not have a branch nearby or may not be the family's preferred choice.
- Potential Cost: While you get a contribution, the partner firm's overall funeral prices may not be the most competitive in your local area.
The key is flexibility. Your family is not obligated to use the partner director. They can always take the cash value and shop around, but they would forfeit the bonus contribution.
2025's Top Insurers for Funeral Cost Cover
When choosing a policy, it's vital to look beyond the headline premium. The features, flexibility, and reputation of the insurer are just as important. Here’s how some of the UK's leading providers stack up for funeral cost cover in 2025.
Legal & General
A household name and one of the UK's largest life insurers.
- Over 50s Fixed Plan: A straightforward plan with guaranteed acceptance for UK residents aged 50-80. You're covered for life after a one-year waiting period. Premiums are fixed and stop at age 90, but cover continues for life.
- Funeral Benefit Option: L&G partners with Dignity Funeral Directors. They currently offer a £300 contribution if your payout is used with a Dignity director. This is a significant and competitive bonus.
- Term Insurance: L&G also offers highly competitive standard life insurance and critical illness policies, which can be set up to run to age 90 to cover funeral expenses.
Aviva
Another giant of the UK insurance industry, known for its strong brand and customer service.
- Over 50s Life Insurance: Guaranteed acceptance for ages 50-80 with a 12-month waiting period. Premiums are payable for life.
- Funeral Contribution: Aviva also partners with Dignity and offers a £300 contribution, matching the L&G offer and making them a strong contender.
- Life Insurance+: Their flexible term insurance product can be a very cost-effective alternative for those in good health.
Royal London
A mutual insurer, meaning it's owned by its members rather than shareholders. Often praised for its ethos and excellent claims record.
- Over 50s Life Assurance: Open to ages 50-80 with guaranteed acceptance and a waiting period that reduces from 24 months to 12 if you select their funeral benefit.
- Funeral Benefit Option: Royal London's long-standing partnership is with Co-op Funeralcare. They offer a £250 contribution and the shorter 12-month waiting period, a unique dual benefit. This is a great option if Co-op is your preferred provider.
SunLife
SunLife are specialists in the Over 50s market and are arguably the most recognised brand in this specific space.
- Guaranteed Over 50 Plan: A simple, direct product. They are known for their clear marketing and straightforward process. Their standard plan has a 12-month waiting period.
- Funeral Payout Promise: While not a contribution like the others, SunLife promises to pay out claims quickly (often within one working day of receiving the necessary documents) to help families access funds for a funeral deposit.
- Guaranteed Funeral Plan: They also offer a separate, FCA-regulated pre-paid funeral plan, so it's important to distinguish this from their Over 50s life insurance.
Vitality
Known for its innovative approach linking insurance with wellness.
- Not an Over 50s Provider: Vitality does not offer a traditional Over 50s plan.
- Wellness-Linked Term & Whole of Life: Their proposition is different. You take out a fully underwritten policy and are rewarded for healthy living (tracking activity, regular health checks). By engaging with their programme, you can significantly reduce your premiums over time.
- Best for: Healthy, active individuals who want to be rewarded for their lifestyle. A Vitality policy with a small sum assured to cover funeral costs can be extremely cheap if you are committed to staying active. It's a proactive approach to planning.
Over 50s Plan Feature Comparison (2025)
Insurer | Min/Max Age | Medical Questions? | Waiting Period | Funeral Benefit Partner | Contribution |
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Legal & General | 50-80 | No | 12 months | Dignity | £300 |
Aviva | 50-80 | No | 12 months | Dignity | £300 |
Royal London | 50-80 | No | 12-24 months* | Co-op Funeralcare | £250 |
SunLife | 49-85 | No | 12 months | N/A | Fast Payout Promise |
*Royal London's waiting period is 24 months, but reduces to 12 if you opt-in to their Funeral Benefit Option at application.
Over 50s Plan vs. Pre-paid Funeral Plan: What's the Difference?
This is a very common point of confusion. Both are designed to address funeral costs, but they work in fundamentally different ways.
A Pre-paid Funeral Plan is a product where you pay for your funeral in advance, at today's prices. It's a contract for a service.
An Over 50s Plan is a life insurance policy. It provides a fixed cash sum, not the funeral service itself.
Since 29th July 2022, pre-paid funeral plans have been regulated by the Financial Conduct Authority (FCA), offering consumers much greater protection. This was a crucial step in cleaning up the market.
Here’s a head-to-head comparison:
Feature | Pre-paid Funeral Plan | Over 50s Life Insurance |
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What you buy | The funeral service itself | A life insurance policy |
The Payout | A funeral arranged by the plan provider | A fixed cash lump sum for your beneficiaries |
Inflation | Locks in funeral director's costs. Third-party costs may not be covered. | Payout is fixed and does not rise with inflation. |
Flexibility | Limited. Tied to a specific plan and director. | High. The cash can be used for any purpose. |
Shortfall Risk | Third-party costs can rise, creating a shortfall. | Funeral costs could rise above the payout amount. |
Health Questions | No | No |
Regulation | FCA Regulated | FCA Regulated |
Which is better? It depends on your priority. If you want to lock in the price of the director's services and have a specific funeral in mind, a pre-paid plan is a strong choice. If you value flexibility and want to provide your loved ones with cash that they can use as they see fit, an Over 50s plan is often superior.
Considerations for Business Owners & The Self-Employed
If you run your own business, are a company director, or work as a freelancer, planning for the unexpected is even more critical. You don't have the safety net of an employer's 'death in service' benefit, which typically pays out 3-4 times your salary. Your death could have a dual impact: on your family's personal finances and on the viability of your business.
Life insurance is not just a personal matter; it's a cornerstone of good business continuity planning.
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Personal Life Insurance: This is the foundation. A personal Term or Whole of Life policy is essential to replace your lost income for your family, clear personal debts like a mortgage, and cover funeral costs. Don't rely on your business to provide for your family after you're gone.
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Relevant Life Cover: This is one of the most tax-efficient protection products available for company directors and employees of small businesses. The company pays the premiums for a personal life insurance policy for the director.
- Tax Benefits: The premiums are typically an allowable business expense, and it's not treated as a P11D benefit-in-kind for the director. This can result in significant tax savings compared to a personal policy paid from post-tax income.
- The payout is paid tax-free to the director's family or nominated beneficiaries.
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Key Person Insurance: What would happen to your business if you, a co-director, or a top salesperson were to die suddenly? Key Person Insurance is a policy taken out by the business on the life of a crucial individual. The payout goes to the business and can be used to cover lost profits, recruit a replacement, or clear business debts, ensuring the company's survival.
As specialists in business protection, WeCovr can help you navigate these options, ensuring that both your family and your business are protected with the most suitable and tax-efficient cover available.
Beyond the Payout: Wellness, Health, and Value-Added Benefits
Insurers are increasingly recognising that their role extends beyond simply paying claims. A healthier client is less likely to claim, and many now actively encourage and reward healthy living. This creates a win-win: you get to enjoy a healthier life, and you can access cheaper insurance and valuable perks.
Vitality is the clear leader here. Their entire model is built on rewarding members for being active. You earn points for steps, workouts, health screenings, and good nutrition, which in turn unlock rewards like cinema tickets, coffee, and crucially, lower insurance premiums.
But other insurers are also adding significant value to their policies, often at no extra cost:
- 24/7 Virtual GP: Get a video consultation with a GP at a time that suits you, a huge benefit when NHS waiting times are long.
- Mental Health Support: Access to counselling and therapy services for you and your family.
- Second Medical Opinion Services: If you're diagnosed with a serious condition, you can get your diagnosis and treatment plan reviewed by a world-leading expert.
- Bereavement Counselling: Support for your family after you're gone.
At WeCovr, we believe in this proactive approach to health. It's why we're proud to offer our life and health insurance clients complimentary access to CalorieHero, our exclusive AI-powered calorie and nutrition tracking app. We want to empower you to build the healthy habits that lead to a longer, happier life, while also helping you secure the best value on your protection. A few simple steps can make a huge difference:
- Aim for Balance: Focus on a diet rich in fruits, vegetables, lean proteins, and whole grains.
- Stay Active: The NHS recommends at least 150 minutes of moderate-intensity activity (like a brisk walk) or 75 minutes of vigorous activity (like running) a week.
- Prioritise Sleep: Aim for 7-9 hours of quality sleep per night. It's vital for physical repair and mental resilience.
- Manage Stress: Find healthy outlets for stress, whether it's mindfulness, a hobby, or spending time in nature.
How WeCovr Helps You Find the Right Cover
Navigating the insurance market can be overwhelming. A comparison site might give you a list of prices, but it won't tell you if the policy is actually right for you. That's where expert, independent advice makes all the difference.
- Understanding Your Needs: We start with a conversation. We take the time to understand your personal and financial situation, your family's needs, and what you want to achieve with the cover. Are we just covering a funeral, or do we need to protect a mortgage and a family's future too?
- Comparing the Whole Market: We compare plans from all the UK's leading insurers, looking at price, features like the Funeral Benefit Option, value-added benefits, and their claims statistics. We find the true best value, not just the cheapest premium.
- Application and Putting the Policy in Trust: We handle all the application paperwork for you. Crucially, we will also help you place your policy "in trust." This is a simple legal arrangement that names your specific beneficiaries. It ensures the policy payout goes directly to them, bypassing your estate and the lengthy probate process. This means the money is available quickly (often in days, not months) and is paid free of Inheritance Tax.
- Ongoing Support: Our service doesn't stop once the policy is live. We are here for you for the life of your policy to answer questions or help with any future reviews.
Planning for your funeral is one of the most selfless things you can do. It's a final act of love that protects your family from financial hardship at the worst possible time. With the right advice and the right policy, you can secure this peace of mind affordably and effectively.
Is the payout from a life insurance policy tax-free?
Generally, yes, if the policy is written 'in trust'. A trust is a simple legal arrangement that separates the policy from your estate. This means the payout goes directly to your chosen beneficiaries without being liable for Inheritance Tax and without having to go through probate. If a policy is not in trust, the payout forms part of your legal estate and could be subject to IHT if your estate's value exceeds the current threshold. An adviser can help you set up a trust for free when you take out a policy.
What happens if I stop paying my premiums?
If you stop paying the monthly premiums for your life insurance policy, your cover will lapse. This means the policy is cancelled, and no payout will be made if you die. It's important to understand that these policies have no cash-in value, so you will not get any of the money you have paid in back. You should only take out a policy if you are confident you can afford the premiums for the duration of the term.
Do I need a medical for an Over 50s plan?
No, you do not. One of the main features of an Over 50s plan is that acceptance is guaranteed for UK residents within the specified age range (usually 50-80 or 50-85). There are no medical questions, no GP reports, and no examinations needed. This makes them an excellent option for those with health conditions who might otherwise struggle to get insured.
Can I have more than one life insurance policy?
Yes, you can hold multiple life insurance policies. Many people do this to cover different financial needs. For example, you might have a large 'decreasing term' policy to cover your mortgage, a 'level term' policy to provide for your family's living costs, and a smaller Over 50s plan specifically to cover your funeral costs.
What's the difference between a funeral benefit option and just using the cash payout for a funeral?
A funeral benefit option is a specific feature where the insurer adds a bonus contribution (e.g., £300) to your policy payout if your beneficiaries use the insurer's partner funeral director. This increases the total value available for the funeral. If you just use the cash payout, you have the flexibility to choose any funeral director you wish, but you will not receive the extra contribution from the insurer.
Will an Over 50s plan definitely cover the full cost of my funeral?
Not necessarily. The payout from an Over 50s plan is a fixed cash sum that does not increase over time. However, funeral costs tend to rise each year with inflation. If you take out a policy today with a £5,000 payout, it may be enough to cover a funeral now, but in 20 years' time, the cost of a funeral could be significantly higher. The policy will provide a very helpful and substantial contribution, but it may not cover the entire bill. It is best to review your cover periodically.