Funeral Plans – What to consider
Many people contact us about funeral plans, as a way to relieve the burden on their loved ones when the inevitable happens. We take a look at what’s involved and what to think about in choosing a plan.
What is a funeral plan?
A basic funeral costs around £4,000, which can cause financial pressure at a time that is already upsetting and stressful. With a prepaid funeral plan you can cover the cost in advance.
In general, plans support people aged 50 or over to pay for and arrange their funeral. It means that when they die, their family has minimal responsibility for the cost.
What does a funeral plan cost?
Funeral plans generally cost somewhere between £3,000 and £5,000 and you can either pay in a lump sum or spread the cost with monthly instalments. As always, you will end up paying more if you take the monthly option.
There are a wide range of plans available ranging from ‘basic’ and ‘standard’ to ‘comprehensive’. A basic plan usually covers cremation fees or burial costs but gives less flexibility over service dates and won’t include funeral cars. A comprehensive plan will include funeral cars and may allow for additional requests and setting out the details of your funeral service.
Bear in mind that funeral plans won’t cover the cost of flowers, burial plots or a wake.
Do I need a funeral plan?
A funeral plan is one way to give you peace of mind for the future, but there are other ways you can set money aside for funeral costs. You could plan to fund your funeral from your estate as soon as you die.
One of the advantages to buying a funeral plan is that it protects against inflation. If you buy a plan now and live for another 20 years, you may have paid £5,000 for a funeral that would now cost perhaps £8,000. On the flip side, if you buy a plan but die within 12 months, you will not gain this level of saving.
But if other costs have risen this could mean your family has to pay the difference – a good reason to check the details of what’s covered and the cost limits.
How does a funeral plan work?
Your provider will put your payment into a trust fund or invest it in an insurance policy that pays out when you die. The Financial Conduct Authority (FCA) has rules to protect your money either way.
The payment option you choose is important. If you decide to pay in instalments and die before paying the plan in full, your family may need to make up the shortfall. Some providers, however, will cover the cost if you pass away before all the monthly payments are made.
What are the key things to consider?
The initial things to consider are your funeral wishes, as these will guide your selection of a funeral plan. Do you prefer the idea of burial or cremation, and will you want a burial plot? Burial plots can be expensive in some locations and not part of the funeral plan.
Consider too whether a plan is the best way to prepay for your funeral. You may want to talk to an estate planner about whether it is simpler to state your wishes in your will and set aside funds in your estate. You could also buy a life insurance policy to cover the costs.
Another factor is whether you plan to move in the next few years. Some funeral plans link up with a local undertaking service, and if you move the plan may not cover you.
Finally, whatever you decide, make sure your family is aware of your plans and the action they need to take when you pass away.
Are funeral plans regulated?
Funeral plans are not currently regulated, but they will sit within the Financial Conduct Authority’s remit from July 2022. Currently the Financial Services Compensation Scheme (FSCS) doesn’t include funeral plans, which means you wouldn’t automatically get a refund should the provider go out of business.
A professional body for providers called the Funeral Planning Authority (FPA), has a code of conduct that all of its members must comply with. One rule is that the FPA will honour funeral plans should a member go bust – so make sure your provider is a member of the FPA.
How can Assured FG help me organise a funeral plan?
We advise on all aspects of estate planning, funeral arrangements and financial decisions for the future. If you’re considering paying for your funeral in advance, we will talk you through the options and make sure you understand the pros and cons of each approach.
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