The main reason funeral insurance exists is that we do not know when we will pass away, therefore on the basis that it could be sooner, rather than later, we need to prepare for that unfortunate eventuality. That pretty much sums up insurance. It is there for the unexpected. But if you live a long life the cover is still there for you too.
Most people who buy funeral insurance do not have a large lump sum of money sitting aside that can be used for such purpose when the time comes.
Funeral plans mean you do not have to save the money for your funeral, and of course you can never save at a faster enough rate to counter passing earlier in life than expected. Once cover is in place you have some assurance that money is available for your funeral.
The misinformed information about funeral insurance is that it is a poor substitute for saving for your funeral and that it potentially costs more over time than the amount of cover. This assumes that funeral insurance is a savings scheme, it is not it is an funeral insurance policy. You take it to protect yourself whether it is needed in 3 years or 20, either way it is there when you need it. It is not like saving $10000 for a holiday and when you reach that target you go away. With your eventual funeral we do not know when that will be.
Lets hope your passing will way down the track, if so your claim will just be paid at that time, you do not lose your sum insured. The worst case scenario under some policies is that you may pay more in premiums than your cover amount if you live a long life, if that is the case I say, good I would rather have the long life!
If you do not have large lump sum of cash on ready stand-by or cannot save a large amount quickly then funeral insurance may be an option for you.