Will life insurance pay for funerals? What does an Over 50s life insurance policy cover?

LIFE insurance is something which a person may take out for a whole host of reasons. The policy will vary from provider to provider, and that may include the payout and the policy's benefits. Will life insurance pay for funerals?

By JESS SHELDON

PUBLISHED: 14:51, Thu, Jun 6, 2019, | UPDATED: 15:01, Thu, Jun 6, 2019

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Whether it’s to support loved ones after one’s death or to clear any unpaid debts they may have, taking out a life insurance policy may be something which gives a person ease of mind for the future. An individual may also be aware of the cost of a funeral. According to the Money Advice Service, on average, this totals £3,757. At £4,267, a burial typically costs more than a cremation - which has the average price tag of £3,247.

Life insurance policies may be taken out for a whole host of reasons

Some people may look to ensure that the costs are covered ahead of their death, to alleviate the need for their family to foot the bill.

Life insurance: Will life insurance pay for funerals? Some may look to pay the cost before death (Image: GETTY)

It may be that funeral cover is included as part of a life insurance policy.

“However, with a term-level insurance policy, it's likely you will die after the policy expires or, if it's a decreasing term policy, die when the payout isn't high enough to cover the significant expenses of a funeral,” the MoneyExpert website states.

Rather, a whole of life policy, which is also called assurance, will deliver a payout upon someone’s death - whenever that may end up being.

The premium of this policy will likely be higher than term level insurance, meaning it may be able to be used to cover the funeral cost.

For those over the age of 50, the whole of life policies targeted at this age range of people exists, aptly named Over 50s life insurance.

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Life insurance: Planning finances for the future is something many looks to do (Image: GETTY)

Life insurance: Some people opt for life insurance policies for a funeral, while others take out pre-paid funeral plans (Image: GETTY)

“If you're over 50 and under 85, your acceptance is guaranteed and the payout fixed, no matter when you die,” MoneyExpert explained.

It may be that these policies are taken out specifically taken out for funeral and death expenses, while some of these policies will include specific funeral benefits.

Rather than an insurance plan, others may instead opt for a pre-paid funeral plan.

Life insurance payouts are not normally subject to income or capital gains tax.