Engage Mutual is hoping to convince people to make payouts on its over-50s life cover.
The society says up to £5,000 can be paid out before probate, which can then go towards a funeral. Premiums start at £10 a month.
Since Engage Mutual is a friendly society, policyholders can nominate a beneficiary in the event of their death to whom the money can be released.
Engage Mutual sales director Stuart Tragheim said: “The ability to access cash quickly to help pay towards funeral or other expenses takes significant stress away for those dealing with bereavement and loss of a loved one.
“With average UK funeral costs increasing by up to 12 per cent in the last two years and just over a quarter of over-50s putting money aside to pay for their funerals, we know from customers that nominating a beneficiary is a major benefit.”
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Philip Stevenson, of Cheshire-based Ark Financial Advisers, said: “Nobody that we deal with comes to us saying they need the money for a funeral.
“I don’t see it as being an issue.”