Are you worried there won’t be enough money in your estate to pay for your funeral? Would you like to make sure your loved ones aren’t left with the bill? A funeral plan is the answer, and this guide contains all the information you need to know.
What is a funeral plan? It’s a way of paying upfront for your funeral, so your relatives don’t have to cover the costs themselves. You can also use it to arrange what happens on the day and save money because you pay the current price for services that might be more expensive in the future.
Are funeral plans worth buying?
The rising cost of funerals is leading to increased interest in funeral plans. They are a way in which you can plan your own funeral in advance. If you buy a funeral plan, it takes the pressure off your family, both emotionally and financially.
A funeral plan also helps to avoid cash-flow problems at a time of need. It means your family won’t have to wait for any funeral money you’ve set aside in your will. The plan will pay out when it’s needed most.
Benefits of prepaid funeral plans
A prepaid funeral plan isn’t something that will suit everyone. However, there are many benefits to getting one.
- Avoid rising funeral costs: In recent years, funeral costs have increased considerably, and they don’t seem to be slowing down. By choosing a funeral plan you pay the price of today’s funeral and avoid spiralling costs. Check exactly what is covered and what is not.
- Plan your funeral: You’re able to liaise with the funeral director and plan out the details according to your personal preference.
- Discuss your end of life wishes: Having a plan in place means you might want to discuss your end of life wishes openly with loved ones.
- Protect loved ones financially: It’s not uncommon for families to struggle with the expense of a loved one’s funeral. If you have a funeral plan in place, you can reduce your family’s financial stress.
- Protect life insurance or savings: If you arrange a funeral plan, it frees up the proceeds from a life insurance policy or funds from your estate. Your loved ones will benefit from a larger cash lump sum.
- Flexible payment options: You’re able to choose from several payment options, depending on your financial circumstances.
- Suit your budget: There are many funeral plans to choose from, which means you should find one within your budget.
Disadvantages of a prepaid funeral plan
As you might expect, there are some disadvantages that you’ll need to weigh up.
- May not cover third-party costs: Also known as disbursement fees, they include doctor fees, minister fees, cremation, or burial fees. Third-party fees can make up to 50% of the total average funeral cost.
- From 2022 the FCA will regulate funeral plans sales and management. Until then, funeral providers are not regulated. The FCA oversees the UK financial services industry and protects customers. The firms employed by plan providers to manage their funds ARE regulated.
- You could be paying for protection you don’t need: If you’re going to need a funeral shortly, there’s little to gain from an inflation-proof plan.
Which is better: life insurance vs funeral plan?
Funeral plans and life insurance are two very different products. They vary in many aspects, including cost and structure. However, they do have one thing in common. They offer a practical solution to putting money aside to help pay for your funeral. You can also take them out simultaneously to serve different purposes.
A funeral plan covers your funeral costs only. Some people may have concerns about whether prepaid plans are safe. Funds paid into the plan are paid directly to the funeral director when you pass away. On the other hand, life insurance provides a cash lump sum payout for the beneficiaries of the policy. It is up to them to decide how to spend the proceeds. One other difference is that the FCA regulates life insurance products.
Your budget will likely influence the right option for you. If, for example, you’re in good health, then life insurance might be preferable. Premiums can be very low. Remember those penny policies that used to be popular back in time? They can now add up to many pounds. However, if you’re elderly, smoke, or have a poor medical history, you may struggle to secure affordable life insurance cover.
Another option is a 'whole of life policy', also known as an Over 50s plan. There is no need to answer any medical questions and you are guaranteed to be accepted if you meet the age criteria (usually 50 - 75) and continue to make the monthly payments. These monthly payments will depend on your age and should not go up but you must continue to pay until your 90th birthday or death. This can mean that you pay in much more than the sum paid out on death, especially as most policies have no inflation protection.
It is important to note that if you cancel your Over 50s plan you will not get any money back.
Which is the best funeral plan?
Funeral plans can vary considerably in terms of cost and what services they include.. When you compare providers, there are certain things you need to think about if you want to ensure you get the plan that is best for you and your loved ones.
- Funeral Planning Authority (FPA) registration: this organisation regulates providers in the UK pre-paid funeral plan industry. Registered plan providers have to operate under a strict set of rules.
- Your funeral requirements: You want a plan that documents your wishes.
- What is and what isn’t included: Most plans will cover the funeral director's fees and make a contribution towards the third party costs such as the cremation fees. The Pure Cremation funeral plan covers the whole cost of the simple service - guaranteed.
- Budget: When choosing your funeral plan, look for one that suits your budget.
Which is the best funeral plan for over 50?
When you compare providers of an over 50s funeral plan, the same things apply. There are also additional considerations to bear in mind.
- Age limits - Check that you meet the age qualifications. Most have an upper limit of 75
- Qualification period - you will have to pay in for a minimum period, possibly up to 24 months before you receive a payout. The exception is a death that was the result of an accident.
- Other benefits - Some providers, like Pure Cremation, will match the payments made when death occurs within the qualifying period. This doubles the contribution towards the funeral costs.
What is the benefit? Most Over 50s plans only offer a cash lump sum which can be spent as your heirs wish. The Pure Cremation Over 50s funeral plan delivers a simple cremation, not cash, and this is not transferable to another funeral firm.
Average funeral plan costs
It’s difficult to give you an average for funeral plan prices because it very much depends on whether the plan is for a burial or a cremation. The cost also depends on the plan you choose and if you add any extras. Prices can start at around £3,000 and can rise to more than £5,000.
With the average cost of a funeral still rising, a funeral plan offers one of the best ways to save on the cost of dying, if you buy one a few years before you think you’ll need to use it.
What is the cheapest prepaid funeral plan?
The cheapest funeral plan is a direct cremation funeral plan. You can also save money if you opt to pay the full price upfront. Opting to pay over a longer period of time will cost a little more as the provider must add in the effects of inflation over the payment period.
Funeral plan comparison
You should always compare different funeral plans before making your final decision. Check what the plan includes, especially when a provider offers what looks like the same service but at a lower price.
To help you find the right direct cremation provider, we’ve made a comparison for you. Why not spend a few moments and compare the features of our service to other providers?
Choosing the right funeral plan provider
Finding the right funeral plan provider is crucial for you and your loved ones. To select the best one, you should consider the following:
- Price: But remember the cheapest is not always the best
- Service: What you want your funeral plan to include
- Guarantees: That your family won’t have to pay more when the time comes
- Security: Make sure the plan provider is registered with the Funeral Planning Authority
Find about even more things to consider before choosing your funeral provider.
How to find out if someone has a funeral plan
It is always best to tell your family or representative that you have taken out a funeral plan and make it easy for them to find the details. Some plan providers, like Pure Cremation, are happy to supply additional copies of documents at no additional charge.
There is only one central point to check, and that’s the Funeral Planning Authority. They now offer a “trace a funeral plan” service. However, not all providers are members.
You may be able to determine whether your loved one paid for a funeral plan by checking their bank statements for as long a period as possible.
Alternatively, go through their paperwork looking for a funeral plan or life insurance details. You may be able to find a certificate or official confirmation of the plan.
Alternatives to prepaid funeral plans
You might choose to put a little money aside each month. There are a few downsides to this option. It’s not entirely risk-free as you may die before you’ve built up enough to pay for a funeral.
It is perfectly appropriate for the deceased’s own funds to be used to pay for their funeral. Money can be released from the account of a deceased person on presentation of the death certificate and funeral invoice.
Another option is to leave money behind in your will to cover the cost of your funeral. The disadvantage with this is that it can take some time for properties to be sold after someone dies. Your family will have to find the money to pay for your funeral and reclaim this from your estate. Often this means taking out a loan or using a credit card.
Some employers provide a payout if an employee dies while they are still working for them. You might also receive a benefit upon death if you’re a member of a trade union, professional body, or other association.
The final option is to pay for life insurance. The lump sum payment from a life insurance policy could be to pay for a funeral.
You don’t have to worry about how to pay for a funeral if you contribute to a prepaid funeral plan. We’ve got prepaid funeral plans to suit your budget, so get in touch with our team to learn more.