Liam Croke: Funeral expenses - a solution for the over 50s

A number of weeks ago, I wrote an article about people I encounter all the time who have the wrong type of life cover in place, specifically they have the wrong amount of cover.

A number of weeks ago, I wrote an article about people I encounter all the time who have the wrong type of life cover in place, specifically they have the wrong amount of cover.

What amazes me is that the majority cannot tell me why they have the level of cover they have in place – they don’t logically know if they are over or under insured - but even worse than that, they have the wrong type of policy in place.

I won’t get into what type of policy you should or shouldn’t have as I have covered this area many times previously.

But what surprised me was the number of people who contacted me who were over the age of 50.

What they all told me was that they had a policy in place that was very expensive and something they were struggling to pay each month. The reason they had this policy in place at all was to cover their funeral expenses, a cost they didn’t want their wife, husband or children to bear.

And this is a real problem, by the way, for many families of those who have passed away and haven’t left provisions for their funeral expenses and whose families do not have the wherewithal to fund the cost themselves; they have to apply for a special grant to cover the cost.

About €5 million each year is being paid out to families (c. 2,000 families get this grant each year) to cover the cost of funeral and burial expenses.

Those who contacted me were all looking for a solution to their problem which was a new life policy that would cover the cost of their funeral that was cheaper than what they were currently paying and I am now delighted to be able to bring good news to them and anyone else who wants to be able to cover their funeral expenses at a very affordable monthly cost.

But before I tell you about this, I want to give you some background as to how much a funeral could cost because, after all, knowing this will influence the amount of cover you should get; we don’t want you paying any more than you need to!

So, how much could a funeral actually cost?

I was looking at various undertakers’ websites and when you take into account the type of coffin a person can be buried in, the cost of buying a particular burial plot, the cost of interment (opening and closing the grave) and other associated fees like flowers, offerings to clergy, newspaper death notices and so on, the cost ranges between €3,000 and €10,000.

It is actually much cheaper to be cremated than buried; about €2,000 cheaper, I estimate.

Regardless of whether someone wants to be buried or cremated the cost is obviously significant and the best way to plan and pay for this certain event is in my opinion to take out a life assurance policy that will pay out a lump sum that will be used towards your funeral expenses.

Paying for your funeral expenses via a life policy is a much better way financially than saving the amount required each month into a regular savings account or using existing savings.

If for example you are a 55-year-old and you estimate that it will cost about €9,000 to cover your funeral expenses when you die, it will cost you €30 each month to pay into a life policy that will pay the sum of €9,000 whenever you die; there is no time limit to this type of life policy, more to come shortly.

If you were to save that same €30 into a regular savings account you would have to save for the next 20 years until you reach €9,000.

But what happens if, God forbid, you don’t live for the next 20 years’? What if something happens that prevents you from being able to save?

You will obviously want to take the uncertainty out of this, and you don’t want to continue paying into an existing policy that seems to be going up an awful lot each month for a small amount of cover.

Nor do you want to leave this financial burden to your family - remember the amount of people who have to apply for that grant I referred to earlier.

Taking out a life policy that is specifically designed for the over 50s who want a policy for no other reason than paying for their funeral expenses is the solution.

The good news is a policy like this exists and the great thing about this policy is that (a) you choose the level of cover you want and (b) you will be automatically accepted because there is no underwriting requirements, no medicals needed, acceptance is guaranteed.

The cover lasts until you do, it isn’t in place for a specific time period and then finishes.

The monetary advantage to this type of policy for some of people who had previously contacted me is significant.

One gentleman contacted me who was paying €84.78 per month on a whole of life policy arranged by his bank that would pay out a lump sum of €15,750 if he was to die.

The policy would last until he reached 80 years of age and was going to be continually reviewed each year and more than likely will continue to increase.

The reason he has this policy is to pay for his funeral expenses and he couldn’t stop paying into it because he thought no one else i.e. any life company would give him cover because of his age (he is 62 by the way) and his previous medical history.

He is absolutely right: no life company would, so he had no choice. Until now, that is, because for the first time he was telling me he knows he doesn’t need €15,750 worth of cover, and he doesn’t need to be paying €84.78 any more each month, and he knows a life company will accept him regardless of his current age or medical history.

What he needed was €5,500 to cover his funeral expenses and it was going to cost him just €35 per month (This was an annual saving of €49.78 each month or €597.36 over the course of one year – might just about cover his water charges!) and this premium would never increase again.