Should I Get A Funeral Plan

Should I Get A Funeral Plan?

Funeral plans are designed to help you meet the cost of your funeral.

How does a pre paid funeral plan work?

Find out how much funeral plans cost.

The Advantages and disadvantages of a funeral plan.

Are prepaid funeral plans a good idea?

Which funeral plan is best?

The best plans available for you

The alternatives to funeral plans

This guide explains everything you need to know about pre paid funeral plans. With detailed reviews of the plans offered by Age UK, COOP, Safe Funeral Plans and many other leading providers

What is a prepaid funeral plan

A pre-paid funeral plan is an easy way to arrange and pay for your funeral in advance, whilst protecting your loved ones against unexpected costs and making sure everything's how you would have wanted it.

They give you control over what happens on the day and make sure you'll be paying today’s prices for services that may be more expensive in the future.

Funeral plans are sometimes referred to by other names such as funeral insurance or pre-paid funerals.

They have received a bit of bad press lately, but the Government has proposed more regulation to protect prople from hard sales techniques on cold calls.

The golden rule is DO NOT buy from any company COLD CALLING about funeral plans.

Now let’s face it, no-one really likes to talk about funerals. But it’s really important to plan ahead, most people are shocked when they find out how much a basic funeral costs.

The cost of funerals increases each year, so it is sensible to start planning ahead for your own peace of mind and so you can reassure your family that you have made plans.

So let's take a look at pre-paid funeral plans in more detail, to see if it is the right choice for you.

• 1: The current and future costs of a funeral
• 2: How does a funeral plan work
• 3: The advantages and disadvantages of a pre-paid funeral plan.
• 4: Which funeral plan is best.
• 5: Alternatives to funeral plans.

1: The current and future costs of a funeral

In the UK the average cost of a funeral is £4,417.*

The actual cost of a funeral will depend on where you live in the UK, the cost also varies depending on what you choose to include, and whether you choose a burial or cremation.

If someone is buried the average cost of a funeral is approximately £4,975*, a cremation costs less on average at approximately £3,858.*

Funeral costs are rising

In fact, average funeral costs have risen by 62% in the last decade.

When you compare this to rises in other costs over the past ten years, like petrol prices, energy prices, house prices and wages – the difference is vast.

This means that the real cost of funerals is increasing faster than income rates, so they get more expensive every year in real terms.

Will the costs keep rising?

If prices continue to rise at the same rate as they have since 2004, projections show the average cost of a funeral could reach £5,285 in five years’ time.

Whilst nobody can know what a funeral will cost when they need one, but it's fair to say the cost of a funeral never gets any cheaper.

Who covers the cost?

We’d all like to put money in place to help our loved ones pay for our funeral. But with the cost of funerals so high, it can be easier said than done.

Research by Sun Life shows in the last year, 63% of people made financial provisions for their funeral before they passed away (+1% since 2018).

But only 64% (+5% since 2018) of these people made provisions that were enough to cover the cost of the whole funeral. So their loved ones may have had to pay for the rest.

69% of people had to pay for some or all of their loved one’s funeral themselves.

In fact on average, they had to find £1,981 to meet the full cost of the funeral.

Planning ahead can help your family and loved ones manage the costs of your funeral whenever it is and whatever the cost.

Finding the money to pay

Last year, only 63% of people made financial provisions for their funeral before they passed away.

But only 64% of these people made provisions that were enough to cover the cost of the whole funeral. So their loved ones may have had to pay for the rest.

69% of people had to pay for some or all of their loved one’s funeral themselves. On average, they had to find £1,981 to meet the full cost of the funeral.

For almost 1 in 8 (12%) families, finding the money to pay for the funeral caused them notable financial problems.

Most people funded some or all of their contribution with their own savings or investments (30%), a credit card (25%), or they borrowed money from someone they knew (22%).

People also paid the funeral director in instalments (16%), sold their belongings (15%), got a loan (10%), applied for a government grant (8%), or paid by other means (12%). *Source SunLife Cost Of Dying Report 2020

So lots of people are having to pay back money, often with interest, to banks, lenders or relatives. A stressful process – especially when they are already grieving.

2: How does a funeral plan work?

Basically a funeral plan allows you to pay upfront for your funeral so your relatives don’t have to cover the costs themselves. This is usually done via monthly installments to make it affordable.

You can arrange a funeral plan for your own funeral or for someone else’s, as long as the funeral will be held in the UK.

A pre-paid funeral plan will also freeze the costs at today's prices, so you know exactly what you’ll pay.

You pay either a lump sum or instalments to the plan provider, or to a funeral director.

You can choose different levels of plan to ensure that the future cost of the funeral you want is covered by the plan, but at today's prices, thereby protecting you or your relatives from any increase in costs over the years to come.

How much does a prepaid plan cost?

Funeral plans usually cost between £3000 and £5000, depending on the features included in the plan. EG. Whether it includes cremation or burial, the number of limousines etc.

The do protect against any future increase in costs and of course inflation.

Monthly payment plans start from around as little as £15 per month.

3: The advantages and disadvantages of a pre-paid plan.

Funeral plans are a great way to help family if you want to arrange and pay for your funeral in advance at today’s prices.

However, a pre-paid plan could be a bad idea if hidden extras mean there are additional costs when the time comes.

Not all plans offer the same level or service and guarantees.

The majority of plans guarantee to cover the cost of the funeral director’s services but some only include a contribution towards the cremation fees and minister’s fees which could leave the family with extra fees to pay.

Our prepaid plans comparison section shows what is covered by all the major plans.

Although they are not right for everyone, they have many pros.

• 1. Freeze costs at today’s prices avoiding future inflation

  With funeral costs increasing every year faster than the rate of inflation. The true cost of a funeral gets larger every year. A prepaid funeral plan locks the amount you will pay at the moment you take out the plan.

• 2. Prepaying avoids cash flow problems at a time of need.

  By paying a small amount each month, funeral plans can help cash flow problems for your family, especially when they are already grieving.

• 3. Remove the worry of arranging your funeral from your family.

  A plan will of course help your family at a tough time but it also makes sure that your personal wishes can be honoured.

  You may wish to be cremated in a certain outfit that is special to you, or an unconventional service, or a wake for family and friends, whatever your choice a pre-paid plan assures that your wishes are carried out in as much detail as you would prefer.

• 4. Guaranteed acceptance regardless of your health.

  Arranging a funeral plan does not involve a medical, so you a guaranteed to have your cover accepted.

• 5. Reduce inheritance tax

  Money paid towards a funeral plan is exempt from inheritance tax, which is helpful if your estate is liable.

  Another bonus of buying a plan rather than putting the money aside in a savings account is that Council's won't class it as an asset it if you're assessed for paying care costs.

• 6. Can be a cheap option if you live in an expensive part of the country

  Plan providers offer standard charges across the country. So if you live in an expensive area, this can lead to massive savings on the cost of arranging a funeral through a local funeral director.

• 7. Affordable monthly payment plans

  A plan allows you to pay for your future costs in small affordable monthly payments.

• 8. Funeral costs covered even if you have not made all your payments

  Some plans will pay out in full even if you have only made a small contribution to your plan.

4: Which funeral plan is best?

5: Alternatives to funeral plans

A funeral plan is one way of ensuring your family doesn’t have to fork out thousands of pounds after you’re gone. But what are the alternatives?

Over 50's life insurance policy

Over-50s plans are life insurance policies that they require no medical underwriting, so poor health makes no difference to your pay-out.

They are basically a life insurance plan that pays out a fixed lump sum to your family when you die, but these plans do have some drawbacks.

If you miss one payment and are not up to date with payments, there is no pay-out and you won’t get any cash back.

Also the pay-out on some plans don’t increase with inflation, meaning that they may not cover the increase cost of a funeral in future years and you could end up paying more in premiums than you can claim.

For example, if you bought a policy with Aviva at age 50 costing £10 per month, it would pay out £2,767. But by the age of 73, you would have already paid this much in premiums.

A savings account

You could put money into a savings account – but even this is not risk free as you may die before you build up enough to pay for a funeral.

Interest rates are also at record low levels, so the cost of a funeral may well increase far quicker than the interest on your savings.

If you to set up a savings account to cover the cost of your funeral. Make sure a relative or friend is included as a signatory on the account. This will make sure they have access to the account when needed.

Paying from your Estate

Banks will normally release funds from deceased bank accounts, providing they are shown an itemised bill from a funeral director and a copy of the death certificate.

• Last updated 25 April 2020

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