Funeral contract: how it works, benefits and points to watch out for
Introduction
Planning your funeral in advance is a final gesture of kindness towards your loved ones. A funeral contract allows you to finance and organise your funeral during your lifetime, sparing your family the burden of difficult decisions and financial arrangements during a period of grief.
This funeral planning solution is becoming increasingly popular in Switzerland. It guarantees that your wishes will be respected and that costs will be covered, without weighing on your loved ones' budget. But between a capital-based contract and a service-based contract, how do you choose? What are the real benefits and the pitfalls to avoid?
This comprehensive guide explains how a funeral contract works, the different options available, the points to watch out for before signing and the criteria for comparing offers. You will also discover how this approach fits into a broader advance funeral planning strategy, to approach this important stage with peace of mind.
📌 Summary (TL;DR)
A funeral contract allows you to finance your funeral in advance via two formulas: the capital-based contract (sum paid to beneficiaries) or the service-based contract (services defined with a provider). Before signing, check the clauses, the insurer's solvency and the evolution of costs. Compare several offers by clearly defining your needs to choose the solution best suited to your situation.
📚 Table of contents
What is a funeral contract?
A funeral contract is an insurance policy that allows you to finance your funeral in advance. Unlike simple planning, it guarantees a capital sum or services to cover funeral costs.
The principle is simple: you pay monthly contributions or a single capital sum. At the time of death, the insurer pays the guaranteed amount to the beneficiaries or directly to the funeral home.
In Switzerland, this solution is part of a comprehensive planning approach. It complements advance funeral planning by securing the financial aspect.
The different types of funeral contracts
The Swiss market offers two main types of funeral contracts: the capital-based contract and the service-based contract.
Each formula meets different needs. The choice depends on your personal situation, your budget and the level of flexibility desired.
Understanding the differences between these two options allows you to select the solution best suited to your expectations and those of your loved ones.
The capital-based contract
The capital-based contract pays a fixed sum to the beneficiaries or directly to the funeral home. This formula offers complete freedom in choosing the funeral service provider.
Advantages: maximum flexibility, ability to compare offers and negotiate prices. You can consult the funeral homes directory to obtain several quotes.
Disadvantages: the capital may be insufficient if funeral costs increase significantly with inflation.
The service-based contract
The service-based contract defines funeral services in advance with a partner provider. Everything is organised according to your wishes: type of coffin, ceremony, transport.
Advantages: no surprises, everything is planned and organised. Your loved ones do not have to manage the logistical aspects at a difficult time.
Disadvantages: less flexibility, dependence on the chosen provider. It is crucial to verify the sustainability and reputation of the selected funeral company.
How much does a funeral contract cost?
The cost of a funeral contract varies according to several factors: your age when taking out the policy, the amount of guaranteed capital, the options chosen and the payment method.
In Switzerland, monthly contributions generally start between 30 and 100 CHF. A single payment can reach 5,000 to 10,000 CHF depending on the desired capital.
For comparison, the average cost of funerals in Switzerland is between 5,000 and 15,000 CHF. Remember to check the management fees and their impact on the final capital. To explore other options, consult our guide on funeral financing.
The benefits of a funeral contract
Taking out funeral insurance offers concrete benefits for you and your loved ones. This approach anticipates the financial and organisational aspects of funerals.
Beyond simple financing, the funeral contract guarantees that your wishes will be respected and relieves your family of the burden of urgent decisions.
Two major advantages stand out: the emotional and financial relief for your loved ones, and the protection of your capital.
Relieving your loved ones financially and emotionally
The main advantage of a funeral contract is to prevent your family from bearing the cost of the funeral at a time of intense grief.
Your loved ones do not have to dip into their savings or take out a loan. They can focus on mourning rather than on financial and logistical aspects.
You also guarantee that your wishes regarding the type of ceremony and services will be respected. Discover why plan your funeral in advance.
Protecting your capital
The capital of a funeral contract generally benefits from specific protection: it is unseizable and does not form part of the estate.
This characteristic protects the funds against potential creditors. The capital is exclusively intended for financing the funeral.
In Switzerland, this protection depends on the general conditions of each insurer. Carefully check the clauses concerning unseizability and the guaranteed allocation of capital to funeral costs.
Points to watch out for before signing
Before taking out funeral insurance, several elements deserve your attention. Careful reading of the contract avoids unpleasant surprises.
Three essential aspects must be examined in detail: the contractual clauses, the financial strength of the insurer and the evolution of costs over time.
Taking the time to check these points allows you to choose a suitable and reliable contract to protect your loved ones.
Checking the contract clauses
Read all the clauses carefully before signing. Check the waiting period (period during which the capital is not paid in full), the exclusion conditions and the termination procedures.
Also examine the conditions for revising the capital and the management fees deducted each year. These fees can significantly reduce the final amount.
Compare several offers in detail. To avoid pitfalls, consult our guide on mistakes to avoid with funeral companies.
Ensuring the insurer's solvency
Choose a recognised and financially stable insurer. Your contract may last several decades: the strength of the institution is crucial.
Check the guarantees offered and the protection of funds paid. In Switzerland, insurers are supervised by FINMA (Swiss Financial Market Supervisory Authority).
Find out about the insurer's financial rating and consult reviews from other customers. This precaution guarantees the sustainability of your funeral contract.
Anticipating the evolution of costs
Will the capital taken out today be sufficient in 20 or 30 years? Inflation can significantly increase funeral costs.
Choose a contract with an automatic capital revaluation clause. You can also opt for an amount higher than the current cost of funerals.
Some contracts allow you to adjust the capital during the term. Check the available revision options to adapt your cover to price changes.
How to choose the right funeral contract
Selecting the right funeral contract requires a clear methodology. Start by defining your needs, then systematically compare the available offers.
This structured approach allows you to make an informed choice, in line with your wishes and your budget.
Two steps are essential: precisely identifying your funeral needs and comparing several insurers' proposals.
Defining your needs and wishes
Start by thinking about the type of funeral desired: burial or cremation, religious or civil ceremony, location of the ceremony.
Then estimate the necessary budget according to these choices. Costs vary considerably depending on the options selected.
To obtain precise quotes and compare services, consult the Wolky funeral homes directory. This gives you a realistic basis for determining the capital to take out.
Comparing several offers
Do not rush. Request detailed quotes from at least three different insurers to compare objectively.
Analyse several criteria: amount of guaranteed capital, annual management fees, contract flexibility, services included, reputation and strength of the insurer.
Use a checklist to facilitate comparison. Note the strengths and weaknesses of each offer. This method helps you identify the contract offering the best value for money.
Funeral contract or other planning solutions?
The funeral contract is not the only option for financing your funeral. Other solutions exist: personal savings, life insurance, third pillar.
Each solution has advantages and disadvantages. Free savings offer flexibility but are not protected or specifically allocated to funerals. Life insurance can cover several needs but without guarantee of use for funerals.
The funeral contract guarantees that the funds will be used exclusively for your funeral. Beyond financing, remember to communicate your wishes to your loved ones and to use tools like Wolky to publish an obituary or create a memorial page.
The funeral contract represents a planning solution that allows you to anticipate the financing of your funeral whilst relieving your loved ones of a financial and emotional burden. Whether you opt for a capital-based or service-based contract, the essential thing is to choose a formula suited to your needs and your budget.
Before committing yourself, take the time to compare several offers, to verify the strength of the insurer and to carefully analyse the contract clauses. Do not forget that other solutions exist, such as personal savings or advance funeral planning.
Once your wishes are defined, also remember to facilitate communication with your loved ones. Wolky allows you to publish an obituary online for 180 CHF, accessible 24/7 and easy to share. Discover our platform and explore our services to honour the memory of your loved ones with dignity.
