Pre-paid Funeral Plans – good planning?

Our own funeral is not something we all want to think about. However, funerals are expensive (the average funeral costs around £3000) and we do not want to leave our loved ones with a financial burden at an emotional time. That is why an ever-increasing number of people are taking out pre-paid funeral plans.

A funeral plan means an individual can pay for their funeral upfront and organise exactly what they want it to involve, taking away some of the stress from family and friends.

The main advantage of such a plan is that you pay at today’s prices. This means even if the price of a funeral has risen greatly, you or your family do not have to pay extra money upon your death. Payment can be made in full or in instalments, usually ranging between 12 to 120 months. Pre-Paid Funeral Plans are becoming more popular with sales rising from 46,340 in 2002 to 112,714 last year according to the . Before purchasing a plan, though, there are several things to consider.

There is the option to have a Tailor-Made plan. This allows you to make a personalised event but you will have to pay for everything you have. The most common type of plan is a Set Plan. A plan provider will offer a range of Set Plans, with the more expensive plans incorporating more services.

With a set plan it is crucial to understand what is covered. Many of the plans will not include what you may think of as basics. Even if it is a more expensive package it may not include a church service. The key elements to see if the plan provider will guarantee are:

  • Burial or cremation costs
  • Burial plot
  • Venue hire for a religious service
  • The distance the funeral director will travel to remove the body

Often funeral providers will cover their own costs but will not guarantee third-party costs – called disbursements. This can include a church service, organists and burial or cremation costs. In the case of burial or cremation costs the provider may agree to guarantee a set figure towards the costs but the shortfall will have to be made up at the time of the funeral. Cremations are generally cheaper so some plan providers will cover the full costs and even if they don’t, there will be less of a shortfall to pay.

In fact, anything that is not guaranteed by the set plan will have to be paid for at the time the plan is drawn.

Despite this, with the rising costs of funerals set plans can provide a saving. It is important to find a set plan that will be adequate for what you want and ensure there will not be too many extra costs.

If you can make a pre-paid funeral plan work for you there are a few final things to ask before signing on the dotted line:

  • Can I make changes to my plan after signing?
  • Should I wish to cancel, is there a cancellation fee?
  • What happens if there are outstanding payments upon death?
  • What happens if I die abroad?
  • What happens if the plan provider goes out of business?

With the latter the Funeral Planning Authority (FPA), the body that regulates these services, will usually work with registered providers to carry out the plan. This is not a certainty so it is still best to ask.

If you are satisfied with the answers a pre-paid funeral plan can genuinely give peace of mind. Should you encounter difficulties when into a plan you can make an official complaint to the FPA.

There are alternatives to pre-paid funeral plans such as life insurance policies or a savings account. However, saving accounts may not accumulate enough interest to cover the rising costs of funerals and with a life policy it is possible you will end up paying much more than a funeral will ever cost.

Certainly a pre-paid funeral plan can be good planning. Though you may not want to think about it, however you take care of your loved ones, even in death, research is essential.


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