when savings fall short on funeral costs

Life is getting tougher for many, and paying for a burial or cremation is a major expense.   

Whilst some take out a funeral plan, or an over 50 life insurance plan to help, others rely on using their pot of savings. 

When the time comes, being able to access any money promptly in order to pay funeral costs is a great benefit for those left behind.

the savings account issue

The good news for setting aside money in a savings account is that it should pay out at least what was paid in. 

But not everyone is aware that if the savings are not held in a joint account they may be difficult to access by those organising the funeral. 

Some bank or building societies will agree to release funds promptly to pay for a funeral, but they are not obliged to do so.  They may instead wait for probate to be granted (probate is the legal authority for the executors or next of kin to administer the estate), and freeze the account in the meantime, making it impossible to access the savings.

Probate can take time, sometimes weeks.  Most funeral directors require payment before this time, which can mean next of kin having to step in to foot the bill, or if this is not possible, to apply for help from the Social Fund (administered by the Department of Work & Pensions).

The Social Fund provides help for people on a low income and in receipt of qualifying benefits or entitlements.  But a helping hand from the Social Fund may fall short of covering all the costs, as there has been a cap on some grants, including those for the payment of funerals, for a number of years. 

funeral costs

Meanwhile. the cost of funerals is significant.

Research conducted by Brahm, March 2010

access to money more quickly

Over 50s life cover plans provide an alternative to saving accounts for those who want to leave a cash lump sum behind, perhaps to help with funeral costs, or unpaid bills.  

While savings accounts should pay out what was paid in, over 50s life cover plans may pay out less than is paid into them, depending how long premiums are paid for.  Also consider that over time inflation can erode  the value of the final lump sum payment.  This also applies to the value of any savings set aside in a savings account.

In situations where a savings account has been frozen, money may be accessed more promptly with an over 50s plan, even if probate is required, if the over 50s plan holder has taken up the option to 'nominate a beneficiary' on their plan. 

This option to nominate a beneficiary  is unique to friendly society plans and means that payment of up to £5,000 in total across one or more policies can be released more quickly and with fewer formalities.  Nominating a beneficiary doesn't cost the policyholder anything. 

Some over 50s plans include a funeral funding option which in addition to the final policy pay out, provides additional, useful cash towards funeral expenses.  Over 50s life insurance plans can help towards, but may not cover the full cost of a funeral.