The passing of a loved one is an emotional and stressful event. At a time where a family will understandably want to grieve, the last thing they want to think about is how they are going to cover the associated costs, such as the funeral. In this article, we look at which providers help take away the immediate financial burden, by offering a funeral benefit to contribute towards such expenses.

To some peoples surprise, dealing with the death of a loved one can be a lot more expensive than expected. A recent study from Sun Life, shows that in 2020 the average cost for a basic burial within the UK costs £4,975, with the average cost of a basic cremation being £3,858. When adding the costs of professional fees and a send-off, Sun Life have estimated that the average ‘Cost of Dying’ is on average £9,493 (https://www.sunlife.co.uk/funeral-costs/). 

For many, this amount of money will not be easy to come by in the time frame required. In recognition of this many insurers now provide an advanced payment for the families of clients with a life policy to help them pay for the short term expenses of dealing with the death of a loved one, whilst the full claim is being settled. Also some income protection products now offer death benefits to support the life assured’s family with most critical illness plans also providing funeral cover for the children of the life assured. 

*Do not offer Life or Critical Illness Propositions

**Do not offer an income protection proposition

***Do not offer a Critical Illness proposition

For all life insurance providers, advanced payment options while a claim is going through probate is included, allowing early access to an amount of money to cover funeral and other immediate expenses. Providers vary with the amount the family are able to access, with some providers such as AIG, Guardian and Zurich placing no defined limit on how much can be paid in advance (albeit they may only release an amount equal to what is required to meet immediate needs).

Similar to life insurance, funeral cover is now being offered within the child element of critical illness policies. In the tragic event of a child of the life assured passing away, the life assured will receive a benefit to go towards funeral costs. However, providers do have exclusions:

  • If the child’s condition was present at birth the claim would not be paid
  • The claim wouldn’t be paid if the cause of death was present before the policy was put in place
  • The claim wouldn’t be paid if a critical illness claim for the child has already been paid

 In the event that a child does qualify for a funeral cover benefit the amount insurers pay varies:

Although a death benefit has not been traditionally offered within Income Protection, in recent times a number of insurers have added a similar feature to funeral cover to their plans. Whilst life policies and children’s funeral cover within Critical Illness insurers will pay a set amount regardless of when death occurs, within Income Protection some insurers will pay varying amounts dependent on when the clients dies within the policy term, or the premium level.

Insurer
Amount paid on death within income protection
AEGON
£5,000
AIG
£10,000
British Friendly
6 x monthly benefit (not a contractual benefit)

Cirencester Friendly

Income Assured

If a client has elected to participate in Cirencester Friendly’s bonuses to accumulate a capital sum, any accumulated bonuses at time of death will be paid to the next of kin. 

Holloway Friendly

Classic Plus

On death, Holloway Friendly will pay the value of the accumulated tax free cash fund to the nominated beneficiary or personal representative.
Legal & General

12 x monthly premiums

LV= 

(Not applicable to PSP)

£5,000 if death is within 4 years of the start of the policy

£10,000 if death is after 4 years of the start of the policy

Royal London

12 x monthly premiums plus the plan charge

Zurich Select
The lower of 6 x monthly benefit or £10,000

 

Whilst it may not be something a client wants to consider, understanding that their death will place immediate financial burden on their family is important. Given that claim payments can often be held up for reasons outside of the insurer and claimants control, being able to cover those immediate costs can help ensure that no further stress is placed on them at a most dire time. 

Overall AIG, Guardian and Zurich stand out in terms of immediate payments for life cover, with all four providers having no limit on the amount that could be paid. In terms of children’s critical illness, AIG, Canada Life, Guardian and Scottish Widows currently offer the highest level of funceral cover for the children of the life assured. With regard to Income Protection, the amount that would be paid on death various and for some will depend on the level of benefits, for others the premiums and others how long tor the performance of the company whilst the policy has been in force. At low benefit amounts AIG stand out, however for high benefit cases British Friendly may pay more.