- 3 min
Preparing for and financing funerals with dedicated insurance
Funeral insurance policies provide access to capital earmarked for financing funerals and offer support services for loved ones. Funeral insurance policies have two major advantages: planning ahead for funeral costs and supporting loved ones with organisational and administrative formalities at this difficult time.
Planning ahead for your funeral is no longer a taboo subject. According to different recent studies, 82% of French people want to pay for their funerals in advance. They also reveal that French people have certain concerns for their loved ones that prompt them to organise their funeral in advance. They want to cover the costs, settle financial issues and formalities in order to avoid conflict and financial injustice among their loved ones, and spare them from having to purchase any other unnecessary and costly services.
On a secondary level, French people also have personal concerns, such as having the ability to leave their key instructions in order to make sure their wishes are properly respected, and obtaining peace of mind by sparing their loved ones from having to make certain decisions while they are grieving.
Why organise and pay for one’s funeral in advance?
There has been a 34% increase in spending on funeral services over that last 10 years. The average cost of a funeral in France, excluding the plot and tombstone, is estimated at €4,000. The actual cost depends greatly on the place in which it is held (there are significant differences among regions) but also on the type of services chosen.
After someone dies, the people in charge of organising the funeral must also make a certain number of decisions at the height of their grief: choosing the funeral home, specifying how the ceremony will take place, settling the costs, sending invitations, choosing the place of rest, etc.
How does funeral insurance work?
There are two main categories of funeral insurance. Capitalisation policies cover the funding of the funeral and planned funeral service policies include a funeral services policy in addition to covering the cost.
At the end of 2014, there were 3.9 million funeral insurance policies in force in France. Capitalisation policies and service policies represented 77% and 23% of the portfolio respectively.
Capitalisation policies, also called financing policies, allow the policyholder to choose the amount of capital when subscribing. This consists of a single payment or regular premiums. Certain solutions offer several methods for making additional payments. The new Predica offering, Crédit Agricole Assurances subsidiarie, for example, allows for the payment of a lump sum upon subscription in order to reduce the regular premiums and adapt to customers’ budgets. A bonus of 5% of the amount of capital chosen will also be paid once the regular premiums have been paid. The capital is guaranteed and adjusted each year, in accordance with the applicable regulations. The capital will be disbursed whenever the death occurs and will be used exclusively to pay for the funeral, since the law provides for the payment of the death benefit to the funeral contractor or to the person who paid for the funeral.
Service contracts cover the payment and organisation of the funeral. The organisational part is delegated to a partner funeral director. The required services are clearly defined when the policy is signed and the amounts of the subscriptions are calculated according to the choices made. The capital defined in this way can cover all of the services or allow for a co-payment.
Predica has chosen to add support services to its financing contract. This offers policyholders the benefit of additional services and support for the recording of the key requirements (type of ceremony, invitations, etc.), and can even include details of the ceremony, if they so desire. It gives loved ones access to extended funeral organisation services, provides assistance with administrative procedures and includes psychological support. Predica provides personalised assistance in this way for up to three months after death.
Sources: Predica - Qualiscope Study (January 2016) – Baromètre Ipsos pour les Services Funéraires de la Ville de Paris (July 2015) – Previseo (figures as of 14/09/2016) – CARAC (survey in June 2014) – CSNAF-CREDOC studies (June 2007 and May 2014) – Fédération française de l’assurance – Xerfi Precepta Services funéraires et assurance obsèques (Les français et l’organisation des obsèques) –Confédération des Professionnels du Funéraire et de la Marbrerie