Life insurance and funeral plans are two financial products designed to provide security for individuals and their families and/or loved ones. While they can both offer support towards funeral costs, there are some key differences between them.


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What is life insurance?

Life insurance is a type of insurance which provides financial protection for people in the event of their death. It pays out a lump sum to the policyholder’s family/loved ones when they die. 

This may allow them to cover funeral costs, pay off outstanding debts or provide financial support for dependants. It could also help you plan for retirement by providing money to cover living expenses once you’ve passed away.

There are two main types of life insurance cover:

  • Whole life insurance: (also known as 'life assurance') can provide cover for the remainder of your life, so long as your premiums are paid. As a result, premiums are often more expensive than other types of protection.*

  • Term life insurance: can provide cover for a limited time. The policy only pays out if you die within the term agreed. Due to this, it's typically cheaper than a whole life policy.*

*The cost of premiums is typically fixed unless you choose an ‘increasing policy’.

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.


What is funeral cover?

A funeral plan is used to cover the cost of a funeral. It pays out when you die, with the money used to cover costs associated with your funeral. This could include burial or cremation fees, coffin and hearse costs, flowers, catering and other related expenses.

They can also be prepaid plans, where you pay a set amount each month. This may make planning easier for your loved ones, as they won't have to worry about raising the funds themselves.


What is the difference between the two?

Life insurance and funeral cover can both help to provide financial support for a funeral. However, they have some key differences:

  • Life insurance pays out a lump sum to your beneficiaries to cover various finances. Funeral cover pays out a fixed amount that covers the cost of your funeral directly.

  • The amount life insurance pays out is usually much higher than the amount for funeral cover as it can be used to cover various expenses.

  • Funeral plans may be cheaper and more affordable than life cover as there are fewer features associated with them.

  • Life insurance tends to provide more options than funeral cover, such as the ability to build up a cash value over time.*

Ultimately, your decision depends on what you intend to cover when you pass. For example, a funeral plan should suffice if you only want to provide cover for your funeral. However, life insurance can help to cover other costs should you pass away, so it could be worth having greater protection.

*The insurance products offered by Cavendish Online have no cash-in value at any time


Unsure of your options?

Is it better to have life insurance or a funeral plan?

This is often a personal decision. However, it may be worth having life insurance to ensure your dependants are financially secure should you pass away. This will help to provide them with financial support for the future, rather than just covering immediate costs associated with a funeral.

Your age may also have an impact on your decision. As life insurance policies are generally more expensive for older individuals. However, with our Over 50s Life Insurance service, premiums could start at as low as £7 a month*. This includes guaranteed acceptance - even if you are older or have pre-existing conditions*.

Perhaps your family and/or loved ones already have the funds to cover your funeral costs? In this case, your life policy could pay towards a holiday or act as an inheritance to your children or grandchildren.

The type of life insurance you need may also impact your decision. Though a whole life policy protects you indefinitely, there may be cheaper routes available through term life insurance. This depends on the amount of cover required, as well as how long you want the policy to last.

*Terms and conditions apply


How much cover do I need?

As funeral costs can be expensive, you may want to ensure that your policy provides at least this amount. According to FareWill, the average cost of a funeral in the UK can be between £5,000-£10,000, depending on the services required. It can also depend on where you live. For example, a funeral in London may cost more than in other areas of the UK.

A traditional burial may cost around £5,000, while a cremation can roughly cost £4,000. Then there is the funeral director fee, which varies depending on the services they provide. You also need to think about what other costs you may need to cover, such as catering, transport and flowers.

You may also want to consider other financial obligations your dependants may need help with such as:


It’s also worth considering inflation when deciding how much cover you need. As costs can increase over time, your policy should provide enough cover to help your family in the future.

The best way to decide is to think about what your family/loved ones may need if you pass away. This way, you can ensure they are provided for and that things are taken care of.


Cover for all bases

Unlike funeral cover, life insurance can help cover financial uncertainties related to your death. Remember, it's not just about funeral costs, having cover in place can help your family or loved ones with all sorts of finances.

If you're looking to take out a policy, Cavendish Online is here to help. Our advisers are available to answer any questions should you need any further assistance. You could get covered in just a few clicks with our easy-to-use online comparison service, showing you quotes from leading insurers. Take the time to give your loved ones the peace of mind they deserve.


Speak to the experts...

Give our advisers a call today.

Our team of friendly and professional advisers are on hand to help with any questions you may have regarding Life Insurance.

The advisers can also make recommendations tailored to your current situation and will research the market on your behalf, ensuring you secure the cover you need and supporting you every step of the way. 

01392 43 61 93(Monday to Friday, 9am - 5.30pm)

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