Funeral insurance

Funeral insurance is death cover whose benefit, a few thousand euros, is intended for the funeral. It comes in two forms. As a cash benefit, the insurer pays the sum to a named beneficiary, often a relative or a funeral director, who uses it as they see fit. As a service plan, the policy is tied to a detailed funeral quote, coffin, ceremony, burial, that the named funeral director will carry out. The French local authorities code regulates these contracts: it guarantees the insured the freedom to change the chosen funeral director and requires the benefit to be uplifted, so that a sum set at inception still suffices twenty years later. Premiums are often payable for life or over long periods, with a waiting period for death from illness. Hence the recurring criticism of the product: a policyholder who pays for a long time may pay in total far more than the guaranteed benefit, which makes it a very expensive form of saving. For the insurer, the risk is low and well known, medical underwriting is light or absent, and the margin comes from mass distribution. The product illustrates the line between insurance and prefunding a certain expense: everyone dies, only the timing is uncertain.