Are Funeral Plans a Good Idea?
Many may consider the topic of funerals morbid, but planning is important and even reduce stress. Funeral planning can help save money and it allows you to make the decisions that dictate what your funeral arrangements will be so that you can have the send-off you want. The average cost of a funeral is around £4,000 in the UK, which can be a lot for family or loved ones to find in the event of your death. Prepaid funeral plans are popular as a way of covering this cost in advance, but what considerations should you make when choosing a pre-paid plan, and are funeral plans a good idea? In this guide, we’ll walk you through some key things you need to know about prepaid funeral plans to help you decide if they’re the right choice for you.
What are Pre-Paid Funeral Plans?
A pre-paid funeral plan is a financial arrangement that enables you to pay for your funeral in advance by setting aside money, either each month or in a lump sum. You can do this from the age of 18 but many funeral plan providers will not open an account for anyone under the age of 50 years. Funeral plans can either be purchased directly from a funeral plan provider, from a funeral director or other agents selling plans on behalf of a provider. These plans can either be paid for in a lump sum, typically ranging from £3,000 to £5,000 (but can be lower for much simpler plan types), or in monthly instalments usually over one to ten years. Once a plan has been chosen and payments made, the money to cover the cost of your chosen funeral is then held securely in a trust fund or invested in an insurance policy until such time when the services of a funeral director are required.
A prepaid funeral plan does not always include everything required for a funeral. Precisely what is covered varies depending on the provider and also what is included in the specific plan type. As with any insurance policy or plan of this type, you must understand what is and is not included and read all the small print.
Are Funeral Plans A Con?
The nature of something being pre-paid naturally increases the risk to the customer and many scammers take advantage through schemes that require upfront payment for services promised at a later date. Pre-paid funeral plans are not a con – at least, not the legitimate ones. In fact, many people consider pre-paid funeral plans a good idea because, unlike many insurance policies, you are at least pre-paying for something that will inevitably happen. Most companies and funeral directors offering funeral plans are doing so ethically and they even aim to save you money in the long run. However, it is essential that you thoroughly research any funeral plan provider you’re considering, as scammers may use this model to create a funeral plan con.
One way to protect yourself is to check the plan provider is registered with the FCA who acts as a regulator for the significant majority of the funeral planning market. Being registered with the FCA ensures that the provider has been subject to independent review and that specific guidelines and a code of practice are being adhered to.
What Does a Pre-Paid Funeral Plan Cover?
Funeral plans rarely cover everything required for a funeral so it’s important to check the details of each plan before you make a purchase. For example, the cost of a burial plot is not usually included, nor are the costs of flowers or catering. Some plans include a contribution towards third party costs (also known as disbursements) rather than covering the costs. These third-party costs would include items such as the burial or cremation costs, minister’s fees, and doctor’s fees. If the actual costs exceed the allowance then your family or whoever is organising your funeral will have to cover the rest of the bill.
An Alternative Funeral Plan?
Although many choose a pre-paid funeral plan because their preference is to have a more formal service which is more traditional and often more expensive, some find pre-paid funeral plans a good idea for the opposite reason. For example, you may want to choose an eco-conscious funeral or have a natural burial funeral plan. A pre-paid funeral plan can formalise your wishes and help to mitigate any conflict that may arise due to loved ones being unsure of your preferences. It also takes away much of the burden of funeral planning and the organisation for the family.
What are the Benefits of Having a Pre Paid Funeral Plan?
Pre-paid funeral plans aren’t for everyone, but there are many benefits that can make funeral plans a good idea:
Relieving Financial Burden
Chiefly, buying in advance can help prevent your family from having to deal with the financial and organisational burden when they’re distressed and emotional. By paying for the funeral ahead of time, it relieves the pressure when the time comes to carry out the arrangements.
Relieving Emotional Burden
Planning simplifies many aspects, both financial and organisational, at a time which will inevitably be difficult as a consequence of the bereavement. The aim of a funeral is to bring loved ones together in celebration of a life. However, this organiser may not always benefit from this if the burden of arrangements falls on them. Having a pre-planned funeral can take much of the emotional burden away from family members who will be processing their grief.
Better Value Funeral
With the ever-rising cost of living and rates of inflation, a pre-paid funeral plan can be a good idea because it secures your funeral costs at the rate you purchased them. For example, if you purchase a £3,500 plan ten years before you pass and inflation has led that package cost to increase to £5,500, then your family would not be expected to find the extra £2,000 – your funeral plan will be honoured at the original cost of purchase.
Another benefit is that a funeral plan can be useful if you’re in, or planning to move to, an expensive area, as this can affect the cost of funerals with local companies. By opting for a funeral plan from a national provider that has packages priced to work for larger areas of the UK, you can often keep costs down regardless of where you choose to live. Of course, check any plan before you buy to ensure you’ll be covered if moving elsewhere is a distinct possibility in the future.
When somebody dies, especially if it is unexpected, having to make funeral arrangements can feel very rushed. There is not always enough time to converse with other relatives and be truly sure of the kind of funeral your loved one would have wanted.
A funeral plan affords the opportunity to shop around and think about exactly what you want to be included in your funeral. It also reduces the risk of fall-out that might arise from family members disagreeing about what your wishes might have been.
What Should You Consider When Thinking About a Funeral Plan?
As with any financial plan, there are considerations to take into account. Firstly, if the prices of funerals come down, a prepaid policy could wind up costing you more overall.
If you believe that your loved ones will be able to compare prices rationally when the time comes and not unnecessarily incur costs that you would not wish them to then they may be able to find a funeral that costs less than an equivalent plan. This will partly depend on how inflation impacts the price of funerals over future years.
It is also worth considering how much you need the money presently – if you would struggle financially to commit to paying for a pre-paid plan, or you can rest assured there would be enough from your estate to cover the cost when you die, it may not be a good idea to purchase a funeral plan.
Why Are Funeral Plans a Good Idea?
Pre-paid funeral plans are a good idea for some. Many people find that having a funeral plan brings peace of mind and the ability to make your arrangements can feel more personal. For many, pre-paid funeral plans can save money and prevent families from having to worry about rising funeral costs. They also remove an organisational burden at a time when families are distressed. Prepaid plans can also help you to arrange the funeral you want at a more accommodating price.
If you’re completely clear about the type of funeral you want and what is included in your plan, prepaid funeral plans can be worthwhile. Just be sure that you use a provider that is registered with the FCA and therefore that they have to adhere to the strict Rules and Code of Practice the FCA has in place.