Does life insurance cover funeral costs?

Life insurance can be used in a number of ways to support your family and/or loved ones in the event of your death, and funerals are no exception. Instead of relying on your family/loved ones to pay for your funeral, you could give them the ways and means to pay for a dignified farewell.

We'll look at why you might need life insurance to pay for a funeral, as well as what else it could be used to cover.

How can life insurance help with funeral costs?

If you've not already planned for your funeral yet, it might want to be worth looking into life insurance. As a standard, life insurance policies pay out a cash lump sum when you die, which could be used by your family and/or loved ones to cover your funeral costs.

This doesn't have to be the funeral itself, it could be put towards other expenses, such as:

• Booking a venue and catering for the wake
   

• Memorial or headstone
   

• Flowers or other decorations for the funeral
   

• Death notice in the local newspaper
   

• An urn if you're having a cremation

Every funeral is different, and the costs can vary depending on your preferences and circumstances. But the bottom line is that if you have cover in place, you have the potential to take the burden off your loved ones during an already difficult time.

When will a life insurance policy payout?

Providing your policy is in force at the time of your death, and the cause of death is covered under the terms of the policy, your provider should pay out the agreed sum as soon as possible. Though it could take an estimated 30 to 60 days for the payout to be processed.

 Some may insurers offer a 'funeral payment pledge', where the insurer agrees to pay part of a payout amount early on a valid claim to allow the beneficiaries to cover the cost of the funeral. Learn more about how to make a claim.

What else can life insurance cover?

One of the great things about life insurance is that the payout sum doesn't have to be used solely for funeral costs. In addition to covering funeral expenses, your family and/or loved ones could also use the payout towards other financial obligations, such as:

• Paying off any outstanding debts or loans
   

• Providing income replacement for your family
   

• Funding your children's education
   

• Covering mortgage payments or rent
   

• Supporting your spouse/partner's retirement

Perhaps you know what you want to cover, but you're unsure about how much life cover you actually need? This isn't always as straightforward as it may seem, as financially, we all have different circumstances and responsibilities. If you're unsure about how much cover you need check out our cover guide to get started.

Which type of cover should you get?

Cover can be split into two types of policy - whole life insurance and term life insurance.

Term life insurance typically covers a person for a specified length of time, usually somewhere between 5–50 years. If you outlive the policy term, your cover ends and no payout will be issued. Because there is no guarantee of a payout, premiums are usually lower for this type of policy.

Whole life insurance, on the other hand, covers you for your entire life - as long as you continue to pay your premium. Because it's essentially offering permanent cover, premiums tend to be more expensive than for term life insurance. If you're looking for funeral cover, this could be a suitable option.

There's also over 50s life insurance, specifically for those aged 50 and over. It works similarly to whole life insurance where the policy remains active so long as you keep up with your premiums. However, the cover amount is typically smaller than traditional life insurance policies because you’re guaranteed to be accepted for cover.

If you're unsure about your options and need some advice, we recommend speaking to one of our advisers. They'll be able to provide further information on the types of cover available and make recommendations tailored to your current situation.

Please note: The insurance products offered by Cavendish Online have no cash-in value at any time. If you stop paying your premiums your cover will stop, your policy will end, and you will receive no benefit. If you have not claimed before the end of your chosen policy term, the policy will end, and no benefit will be paid.