Funeral plan or life insurance?

catfish50

jamesd wrote: »

If the idea is to pay funeral costs with minimal hassle, consider just using a bank account. Many banks like NatWest will send an undertaker a cheque from the value of accounts they hold when presented with a death certificate and invoice from an undertaker. It's fast enough to be done within a week with minimal hassle. Procedures should be checked with the bank concerned to ensure that it will pay out promptly in this way.

This keeps the money in a savings account earning interest until it's needed and the amount can be increased gradually as required to cover inflation.

That's very useful to know, thanks. The loss of value through inflation is a concern, but I'll give this option some thought.

Funeral plans are generally very poor value for money. Better to avoid them unless there's really some need to have one.

Yes, that was my impression.

catfish50, from personal experience it does make it easier when there are clearly expressed wishes over things like religious or otherwise nature of a ceremony of some sort and cremation or burial. Desired location of remains is also something worth knowing. Even where there's agreement it's nice to have fewer decisions to make at a high stress time.

I appreciate your concern, but I see it differently in the light of my particular circumstances and my particular family.

lisyloo

The loss of value through inflation is a concern

inflation linked savings are now available via NSI.
The only drawback is you would get no interest in the first 12 months but that's not the end of the world.

catfish50

lisyloo wrote: »

Like all "self-insurance" that doesn't help if have a claimable event short term before you've saved up enough.

To clarify, in my case I would be allocating pre-existing savings if I went for that option. It's attractive to me, except for the inflation problem, because my main object is for the family not to have to find the money to pay for the funeral out of their own stretched budgets while waiting for probate.

This really does depend on your situation.
My in-laws bought funeral plans but it was a good (genuine and legal) use of money to them because of their benefits situation.
It was not worth them having lots of capital. (We are not into illegal deprivation but I am into sensible financial planning).

Agreed.

catfish50

lisyloo wrote: »

inflation linked savings are now available via NSI.
The only drawback is you would get no interest in the first 12 months but that's not the end of the world.

But would NS&I be able to pay out on presentation of a funeral director's invoice?

lisyloo

I have no idea.
But you could investigate holding the certificates in joint names.

71 (c) in the event of the death of a joint Certificate holder, full ownership will pass to the survivor(s) who will be entitled to operate the Certificate on the same terms;

lisyloo

This does of course protect your money from general inflation (RPI) and not from inflation specific to the costs of funerals.

dunstonh

There are insurance companies that allow you to buy a whole of life assurance policy with no investment element for a single premium rather than monthly.

e..g you pay £x up front and on death, whenever it is they will pay £y amount out as a lump sum.

Positive is that everything is guaranteed and you know how much it costs and how much you will get back. Negative is that if you live for a short time, you have paid more than you would if you paid monthly.

Some of the insurers also offer monthly payments for a period. i.e. you get whole of life assurance but pay for it over 10 years instead of rest of life.

You could think of a single premium whole of life assurance as an investment. You know you (your estate or beneficiary in reality) is going to get back more than you paid. The effective rate of return is unknown as the longer you live, the lower the annual equivalent return will become.

I'm just throwing ideas in the hat. Not saying they are suitable but I doubt many people are aware that you can pay for whole of life assurance in different ways.

catfish50

lisyloo wrote: »

I have no idea.
But you could investigate holding the certificates in joint names.

Looks like this could be the answer for me. Thanks very much. Thanks to everyone. Much appreciated.

catfish50

dunstonh, sorry to be thick but I'm lost. If I bought a single premium whole of life assurance plan guaranteed to pay out £y, why would the rate of return be lower the longer I lived? If I died immediately, wouldn't I have paid out more than the beneficiaries would receive? There's something I'm not understanding.

huckster

As products vary, as do individual requirements, you are probably best to seek advice from a local independent financial advisor.