What is a funeral insurance contract?
Taking out a funeral insurance policy allows you to plan for the financing of your funeral while relieving your family from the burden of arranging it. It is not always easy for family members to handle such matters, which can become a significant financial and emotional strain. As these policies become more widespread, what should you know before signing one?
Reasons to Purchase Funeral Insurance
Currently, funeral costs average around 4,500 euros for a burial and 3,500 euros for a cremation, according to Lassurance-obseques.fr. Prices are about 25% higher in Île-de-France.
The cost varies depending on the choice of mandatory and optional services. With prices consistently rising, more and more French people are considering covering the cost of their funerals during their lifetime to:
- Materially relieve their loved ones of funeral expenses;
- Relieve their family from the burden of planning their funerals;
- Avoid putting their loved ones in an uncomfortable position to ensure their last wishes are respected.
Types of Benefits in Funeral Service Contracts
Generally, different funeral service providers offer similar types of services for a funeral contract. Companies are emerging online with very competitive prices while maintaining service quality. If you don't opt for a personalized service contract, you can still outline the details of your future funeral to your loved ones:
- Choice between burial or cremation;
- Type of ceremony: religious or secular, and its proceedings;
- Selection of readings and music;
- Type of funeral monument: tombstone, vault, cremation monument, or mixed monument;
- Decision on whether to purchase a cemetery plot or not;
- Choice of type of coffin or urn (including eco-friendly options);
- Type of coffin lining;
- Number of pallbearers and their attire;
- Presence or absence of flowers and wreaths;
- Request for donations to a foundation or association;
- Obituary notice in the local or regional newspaper;
- Identification inscription with a memorial plaque, directly on the grave;
- Repatriation of the deceased to their home;
- Family support in the form of a psychologist or domestic help.
The two types of contracts: capital-based and customized benefits
Capital Contract
The capital contract, also known as a funding contract, allows individuals to save a sum to finance funeral expenses. Three-quarters of subscribers choose this type of funeral insurance contract without a guarantee that their funerals will be organized according to their wishes. As the name suggests, the insurer pays a capital sum to the designated beneficiary, who then makes all the decisions.
Before the Sueur law of 2013, the deceased could not be sure that the savings would be used for the funeral. Since then, the beneficiary is obligated to use the capitalized amount to cover funeral expenses. Any surplus can be used as they see fit.
Personalized Services Contract
This type of contract is also known as a funeral agreement. It covers funeral expenses while also managing the organization according to the policyholder's wishes.
Ultimately, you benefit from two contracts in one:
- The insurance company establishes a contract to accumulate capital;
- You sign a contract with a funeral home that will organize the funeral.
The policyholder selects the services they want with the help of a funeral advisor. After choosing specific options, they receive a personalized quote determining the amount of capital to be accumulated. The family is relieved from handling the organization and the cost of the funeral. They only need to select any desired texts, music, and decorations, unless the insured has already planned everything, ensuring a funeral that reflects their wishes. Take time to compare funeral home services.
Is there an ideal age to sign up for such policies?
It's clear that at the age of 30 or 40, most people don't think about their funerals. This question starts to arise between 50 and 60 years old. Where to be buried, what type of burial to choose, church service or not?
Most insurers allow subscriptions up to the age of 80. Some companies can even extend beyond that, up to 85 years. But what's the point of waiting so long? Your contributions will be lower if you start saving earlier. By paying during your working years, it's similar to a mortgage; you'll be done with it by the time you retire.
The 3 Types of Contributions in Funeral Insurance Contracts
Based on your age and financial capacity, you can choose from three types of contributions offered to you. This allows you to build up capital through payment by:
- Lump-sum premium: you build your capital with a single payment;
- Temporary premium: the capital is built over a set period with monthly, quarterly, or annual installments;
- Lifetime premium: installments are made periodically until the day of your death.
Note: You benefit more from the lifetime premium by contributing as late as possible. The lump-sum or temporary premium is recommended for younger contributors. However, contributing too early means you might pay more into the capital than the amount eventually received by the beneficiary. Unfortunately, any excess will remain with the insurance company.
Tax Advantages
A funeral insurance contract is similar to a life insurance contract in terms of tax policy.
The threshold to consider is 152,500 euros per beneficiary to qualify for an exemption from potential inheritance taxes.
- For contributions made before the insured reaches 70 years old: no inheritance tax is due if the total amount does not exceed 152,500 euros. Otherwise, a tax of 20% to 31.25% is applied to the amount.
- For contributions made after the insured turns 70: if the contributions exceed 30,500 euros (with policies taken out since November 20, 1991), those paid after the policyholder's 70th birthday are subject to inheritance taxes (excluding the interest accrued during this period). There is no inheritance tax if the contributions do not exceed 30,500 euros.
Funeral expenses may qualify for a deduction from the estate's assets if these are less than 1,500 euros.
Key Takeaways on Funeral Insurance
- A funeral insurance policy is mainly taken out to relieve family members of burial costs and potentially to plan the funeral arrangements in advance.
- A capital contract is recommended for those who only want to manage the financial aspect. Others may prefer a funeral agreement.
- It's advisable to take out the policy before turning 75, although solutions exist for subscribing much later.
- The cost of funeral insurance varies depending on numerous options and your budget.
- Review the contract clauses to ensure funeral services are detailed and that any excess capital is appropriately allocated to the beneficiary.
- Remember to inform the beneficiary about the signing of your funeral insurance contract so they are not surprised by the arrangements made for your funeral.
This content has been automatically translated using artificial intelligence. While we strive for accuracy, some nuances may differ from the original French version.
