Funeral Prepay Plans
What You Need to Know
- The average cost of being laid to rest is currently around £3,500 and is rising all the time.
- Prepaid funeral plans let you pay for a funeral in advance. The major advantage is that you pay the current rate and the plan guarantees the cost of your funeral regardless of when you pass away and how much costs rise in the meantime.
- Almost all funeral directors, including major providers like the Co-Op and Age UK, as well as smaller, independent family firms, will offer a range of prepay packages, so always shop around for the best one to suit you.
- You can either pay for your prepay plan in one lump sum or in instalments. Most funeral homes will let you pay for a funeral over 12, 24 or even 36 months.
- Make sure you know what the plan actually covers. Is it just the casket and service, or does it cover church fees and burial fees? Knowing this for certain can save a lot of stress and heartache later on.
- Before you sign up to a prepay funeral plan, you should check with the provider that it is a member of the Funeral Planning Authority (FPA).
- Remember that some life insurance policies cover funeral costs, so make sure you’re not paying for the same thing twice.
What are Prepaid Funeral Plans?
The average cost of being laid to rest is currently around £3,500, and when you die it will probably be even more expensive. Of course, a funeral may cost much more, or much less than this, depending on the many things, not least the deceased’s wishes.
Even if costs are kept down to an absolute minimum, a funeral will cost money and someone will have to pick up the bill. Many people, therefore, want to make sure that their loved ones aren’t hit with a big bill after a funeral.
One way this is possible is with a prepaid burial or cremation. Funeral prepay plans were introduced to the UK in the mid-1980s (but the concept dates back to Victorian times when friendly societies offered similar schemes). They are now increasingly popular in the UK, and every year 500,000 people take up the ‘pay now, die later’ option. A prepay plan will potentially save you money by allowing you to pay today’s prices. This guarantees the cost of your funeral regardless of when you pass away and how much costs rise in the meantime.
How a Plan Works
Almost all funeral directors, including major providers like the Co-Op and Age UK, as well as smaller, independent family firms, will offer a range of prepay packages.
Quite simply, they will quote you a fee for a funeral, taking into account all your considerations, and then offer you a variety of payment options. In most cases, they will give you the option of either paying in a lump sum or in instalments. For instance, if the funeral you want will cost £3,000, you could have the option of paying £200 a month for 15 months. In most cases, you will not be charged any interest on the lump sum simply for choosing to pay in instalments.
The money you pay into a scheme will be held in trust until the time you day, at which point the funds will be released to cover the costs of your funeral.
Is a Prepaid Plan Right for You?
Prepaid funeral plans can often make a lot of sense. Above all, they can be a reassuring means of sparing your friends and family emotional from extra worries at a very stressful time. Plus, they can undoubtedly be a convenient way of planning the financial side of a funeral and, with a good instalment plan, a great way of affording the rising costs associated with funerals.
However, prepaid plans may not always be the best option for you. For instance, if you already have life insurance, your policy might cover funeral expenses, though it’s always best to make sure this is the case.
Alternatively, if you think you might change your mind about a funeral, or if you’re worried that you might need the money at some point in the future and so don’t want it tied up in a fixed place, you should consider a more flexible option. Simply setting up a regular savings account can help you spread out the costs of a funeral, and save up for it at a rate with which you’re comfortable. The upside of this is that if circumstances change (for example, if you lose your job and really need some money), you can get access to the money and spend it how you like.
Finding the Right Prepaid Plan
Like with all financial products, there really is no single type of prepaid funeral plan. And, just as with insurance or a bank account, the more you are willing to pay, the more you will get.
You should always shop around for the very best prepay plan, and don’t just be tempted to go with the local family firm. There are a number of questions you should ask while considering which prepay plan to go with. Getting the right answers to these can not only ensure you get the best value for money, but it can also save your loved ones time, hassle and stress further down the line.
Consider for example:
- Will the money you pay into your plan earn any interest? If so, who will get this? Will the interest be used to pay for extra costs at the funeral, or will the funeral directors take it as profit? And what if there is money left over?
- Most importantly, what happens if the costs of a funeral go up considerably? For instance, a funeral could be held 20 or even 30 years after a plan was made. Would the plan cover this, or will the family be expected to cover any shortfall?
- What happens if you move home? Will the money you paid into the plan be transferred to another funeral home or directors?
- What does the plan cover? Is it just the cost of the casket and the funeral home? What about doctor’s fees, or flowers and church fees? As always, it’s vitally important you read the small print. Failing to do so can lead to much distress at an already-difficult time for your loved ones.
- And what happens if you change your mind, or if your circumstances change? Can you get part or all of your money back?
Before you sign up to a prepay funeral plan, you should check with the provider that it is a member of the Funeral Planning Authority (FPA). If so, the company will be held to high standards of professional conduct, and the money you pay will be kept safe.
The FPA, which is part of the Financial Services Authority, regularly audits its members and ensures your funds are protected by being held in trust. Be aware that funeral companies do not have to be regulated by the FPA – though they must provide prepay schemes under which customers’ money is strictly safeguarded.
- Dealing with death can be stressful, upsetting and, yes, expensive. Age UK offers help at this difficult time. Visit the Age UK website for more information and for free, impartial advice.