Funeral Plans - What You Need To Know
The cost of a standard funeral is just under £4,300, having increased every year for 15 years consecutively, an overall rise of 122% over this time, according to the insurer ‘SunLife’.
Increasing numbers of people are now taking out funeral plans so they know most of the cost of their funeral cover plans are in place before they are gone, to ensure their family isn’t left in limbo, not knowing where to start or find the finances to do so. Here we will go into further detail about what pre paid funeral plans are and the reasons to get one. We will also explain the different levels of service you can expect including planning, costs and the different types of plan you can buy.
All pre-paid funeral plans guarantee to cover your funeral directors costs which includes their professional advice and support, services on the day, the coffin, hearse and depending on the level of cover you choose, cars to and from the funeral and use of the chapel of rest. This means the cost of these services is covered however, a large part of the overall funeral costs are made up of the 3rd party fees which unfortunately on many plans are not guaranteed.
Are Funeral Plans A Good Idea?
There are several reasons funeral cover is a good idea. The first is financial as funerals can turn out to be very expensive, even if you are trying to keep the costs down. If you choose to go without, there are many funeral costs that your relatives will have to pay for.
The second reason is because it gives you control over your funeral plans. When you take out funeral cover, you are making your own decisions about the sort of funeral you would like. It is your opportunity to consider things like flowers, music and the coffin. These are all things that will make your funeral more personal to you and more meaningful for your family, plus it will save the bereaved from having to make some tricky decisions.
The third reason is because it will relieve your relatives from having to deal with a lot of paperwork, organisation and bills, all at a very difficult time. A funeral plan means you have already taken care of the costs as well as a lot of the planning. This will all be explained further on throughout the page.
Let’s Talk About The Costs
The most important financial benefit of taking out a funeral plan is that you can pretty much freeze the cost at today’s prices, protecting your send off from future price increases.
From choosing your funeral director and dealing with paperwork, to organising the service and transport arrangements, everything in the plan can taken care of when the time does eventually come (providing you choose and pay for these services as part of your plan). For complete peace of mind, it really is essential to be financially prepared. It even allows you to make a record of your preferences for the service itself, whether this includes any special readings, music or flowers. You can add in as much or as little detail as you wish.
A prepaid plan typically comprises of two main costs; payment of the funeral director for arranging and conducting the funeral and the cremation or burial fees. Most providers of funeral cover plans offer a variety of plans to suit the needs of most.
How Do I Decide?
When choosing a Funeral Plan, think about your budget. Make a decision as to how much you want to spend on the funeral, and the services you would like. You will need to weigh up the pros and cons of each company and the range of plans they offer. Find out the exact details of what is included and compare against the rising costs of organising a funeral.
Decide if you are going to make a lump sum payment or whether you would prefer to pay for the Plan in monthly instalments. You may have the option to personalise your plan with special requests, allowing a personal touch, a funeral that remembers you best, helping your loved ones grieve in their own personal way. This means your family can bypass the distress of imagining what your funeral wishes would have been.
It is important to tell your family that you have a Funeral Plan so they know how to activate the Plan when the time comes. You can get a quote for a Funeral Plan here.
Are Funeral Plans Good Value?
If you wish to be cremated using a funeral director, this normally costs an average of £3,214. If you wish to use a funeral director to be buried, this can cost £4,136. These are significant sums of money, but just the beginning of the equation when planning funeral costs. Funeral plans differ significantly in what they cover. Most will not pay for everything you want at your funeral, but it all depends on the policy, the provider and the price. While one plan might simply cover the funeral director’s costs, another might pay for the entire thing, including a plot and the wake. Funeral directors alone only cover collection and care of your body, a basic coffin, a hearse and a simple service. Things like like flowers, readings,music etc will be extra. Similarly if you would like more than a basic coffin this will cost more. Then there are the mourners to consider; you might want a party, a meal, a few drinks somewhere or something totally unique which are all extra considerations.
Because funerals cost such a large sum, funeral cover plans makes good financial sense. Even more so considering you are paying for your funeral at today’s prices rather than the prices when you die. This is a big benefit because funeral costs are rising each year, well above the price of inflation. In fact, funeral costs in the UK have risen by over 100% since 2004. By buying organising your funeral costs now, you can beat those prices rises, regardless of when the funeral service takes place or however much prices may increase in the meantime.
What Happens If You Cannot Afford Funeral Cover Or Funeral Costs?
When you die, the executors of your estate will be granted access to your money for the purpose of arranging your funeral. If there is insufficient funds in your estate and if the the person organising your funeral is on a low income, they may in some circumstances qualify to get a funeral payment from the Government.
How much they get will vary depending on their circumstances, but the payments should normally cover the burial/cremation fee, document preparation, transport to the funeral, and up to £700 for other funeral director costs, like the coffin and hearse. This will need to be repaid, and it’s usually taken from the estate before any debts or bills are repaid.
Alternatively, your local council can arrange a ‘public health funeral’ which is a very basic funeral on a set day, though how the service takes place varies from council to council.
What Happens To The Money I Pay?
- When you purchase funeral cover, your money is invested in a trust fund (or an insurance policy) until the time comes
- The trust fund is managed and audited independently
- The money is paid to the funeral director upon activation of the policy
These points all ensure that your money is safe regardless of what happens to the funeral plan provider or the funeral director. In the event of the funeral director going out of business, your money will be re-allocated to an alternative funeral director.
At around £3,600 funeral plans are a significant purchase and so you want to be sure that when you purchase a plan, that your family will receive the services that you have paid for.
Are Funeral Plans Safe?
Funeral plans are regulated by the Funeral Planning Authority (FPA) which was set up in 2002 instigated by HM Treasury. It is the only authority to regulate funeral cover plans and not to be confused with the other bodies and associations that various funeral directors and funeral plan providers are affiliated with.
The FPA has a strict set of Rules and a Code of Practice that funeral plan providers must demonstrate they operate. They are then tested annually when the companies must apply for re-registration.
This is taken directly from the FPA’s website:
“The broad purpose is to help ensure that money paid by the consumer to a funeral plan provider for the purposes of providing a funeral in the future is kept safely, and is available when the time comes for delivery of the agreed funeral in accordance with the plan specification.
The effect of the regulation is that those plans which are structured in accordance with certain statutory criteria, are excluded from direct financial regulation by the Financial Conduct Authority.
The detail of regulation of funeral plans is contained in articles 59 & 60 of The Financial Services & Markets Act 2000(Regulated Activities) Order 2001 “
The Funeral Planning Authority’s key role is to ensure that your money is protected in a trust, regularly audited and reviewed by an actuary, whose job it is to ensure your money is well managed and will be available to pay for your funeral in the years to come.
By placing your plan with an FPA registered provider, your plan will automatically be allocated a funeral director (you can nominate one) who is member of the ‘National Federation of Funeral Directors’ (NAFD) and or ‘National Association of Allied & Independent Funeral Directors’ (SAIF) member so you can be sure of the highest standards when the time comes.
With all FPA plan providers your local funeral director will be stated in your plan documentation as they will have already accepted your plan from the plan provider.
Other Considerations
Can my Funeral plan be overridden by a will?
If you write something in your will that is different than something you have written in your funeral plan, even if the will was written before the funeral plan, The wishes as detailed in the funeral plan will be executed unless the executors decide they want to go with what is written in the will. It will be their responsibility to make the necessary changes and pay for any costs this may incur.
Can I arrange a joint funeral plan?
It depends. Some funeral plan covers let you include two names – so it can be used for either person, whoever dies first. Other providers may only allow one name on funeral plans. If this is something you are interested in, check with the funeral plan provider.
Questions to ask when setting up funeral cover
- Will I be charged if I cancel?
- Are you covered by the FDA?
- What is and is not included in the funeral plan?
- How many months are the installments paid for?
- Is there interest to pay on the instalments?
- What happens if I die before payment is completed?
- If there are any other expenses for the funeral, what happens?
Questions to ask in relation to flexibility?
- Can I cancel the plan and will there be charges?
- Can I make choices such as my funeral director?
- What happens if my funeral director is no longer in business?
- How easy is it to change the details of my funeral plan?
Practical questions to ask about your funeral plan
- What happens if I die abroad or far away from home?
- What is the process for informing you of my death and that my funeral plan needs to be cashed in?
- How do you converse with my relatives in terms making funeral arrangements?