A prepaid funeral plan lets you pay for the main elements of a funeral in advance, either for yourself or someone else, potentially saving your family stress and expense when the time comes. Here are some of the things you need to think about when you're considering buying a funeral plan.
What sort of funeral would you like?
First you should think about the sort of funeral you want and level of coverage and affordability. In terms of the funeral, do you want mourners at your funeral and do you prefer to be buried or cremated? These decisions can have a significant impact on cost.
In terms of the plan, if you live in an expensive area (or aren't sure how much a burial or cremation might cost where you live), you may want to look for a plan that guarantees the full cost of your burial or cremation. If you opt for a plan with a maximum spend limit, your loved ones may end up paying extra if the full cost of your burial or cremation isn't covered.
You then need to consider: how to pay for the plan, if you want a specific funeral director or particular type of coffin, if you want limos, etc. This will help narrow down your options.
Differences between funeral plans
A direct cremation. There'll be no mourners at your funeral and often no opportunity to visit your body. Plans typically include collection of the deceased, cremation fees and a simple coffin. These are typically the least expensive plans but you should check carefully what's actually included.
A basic cremation/burial with mourners may cover collection and care of the body, and contributions towards officiate fees and cremation/burial costs. You're often restricted on the time and day of the funeral and won't get a limousine, plus the coffin is likely to be very basic.
A traditional standard cremation/burial with mourners gets you more choice over when the funeral takes place and a higher quality coffin (such as wood effect). You might get a limousine too.
A higher-level cremation/burial with mourners is likely to include everything from the basic and standard packages, plus at least one limousine for mourners. Expect to have a high-quality coffin too (wood veneer, solid wood, etc).
Are there alternatives to a prepaid funeral plan?
There are various ways to make financial provision for your funeral and these choices come with different features and benefits. We suggest that you explore all the options available in order to determine what is best for you and your family.
Over 50s plan
An Over 50s plan is an option you may consider. Typically, these require monthly payments to be made in order to provide a cash sum upon death. The amount provided may not cover the whole cost of a funeral when needed. Each provider has their own plan specifications, so you would need to check their terms and conditions.
Savings and Wills
You could leave savings and specify provision in your will. This may require family to pay for the funeral themselves and then wait to be reimbursed, which may be after probate and the sale of assets.
Other options
If you don't have a funeral plan in place when you die, there are a few other ways your funeral could be paid for:
Your estate: Loved ones should check if there's enough money left in your estate to pay for the funeral.
Your family: If there's not enough money left in your estate, your loved ones could pay for the funeral (if they've got the means).
A public service funeral: If you have no family, or they can't afford it, your local council can arrange a public service funeral – a no-frills option where loved ones have little say.
Help from the state: If you (or your partner) get certain benefits, you might be able to get financial support with the funeral costs, including cremation/burial fees, death certificate and transport of the body/mourners. You might also be able to claim for other funeral expenses, such as funeral director's fees, flowers or the coffin, dependant on government scheme rules and criteria.
Should I tell someone I have a funeral plan?
Some people don’t like to talk about death, or funerals, whether it’s their own or a family member’s. A funeral plan can make things easier for everyone by taking care of the arrangements and making a financial provision in advance, avoiding any doubts about what you might have wanted. When the time comes, one phone call to the nominated funeral director or plan provider will activate your plan and they will support you with all the arrangements.
There may be other costs such as third-party fees for cremation or burial fees that need to be paid before the funeral takes place or other items products and services that are not covered by the funeral plan that has been purchased. Payment will be the responsibility of the person legally permitted to arrange the funeral for the deceased.
Will my money be secure?
Funeral plans can only be offered by providers authorised by the Financial Conduct Authority for that purpose. This means all plan providers have to be FCA authorised and customers benefit from the added protection of the Financial Services Compensation Scheme (FSCS) should the need ever arise.
All funeral plans require the funds to be held separately. After the deduction of any administration fee, the sum paid will either be placed into a whole of life insurance policy or into trust. If the latter, the trust must be independent and specifically incorporated for the sole purpose of holding funds required to pay for the funeral eventually. Such trusts are governed by a trust deed that meets the requirements of the FCA.
What if the plan company ceases to trade?
In the unlikely situation of a plan provider no longer in business, the funds are secured and the insolvency practitioner would seek a transfer a plan to another provider or return your monies. If such a transfer is not possible, you would be entitled to compensation under the Financial Services Compensation Scheme.
If your funeral plan provider goes out of business, it should have arrangements in place to ensure that a new regulated provider can carry out your funeral plan. Alternatively, it may provide you with compensation. If these arrangements aren’t in place, the Financial Services Compensation Scheme (FSCS) will protect plan holders of authorised funeral plan providers that have failed.
What is the Financial Services Compensation Scheme?
Regulated funeral plans providers are protected by the Financial Services Compensation Scheme (FSCS). The FSCS is a body funded by the financial services industry, which provides automatic protection if a funeral plan provider goes out of business. You can find more details at www.fscs.org.uk or by emailing [email protected] or phoning the FSCS on 0800 678 1100 or 0207 741 4100. You’ll also be able to refer a complaint about your new provider to the Financial Ombudsman.
For all types of funeral plan claims, you are protected up to £85,000 per eligible person, per firm. If you choose to receive compensation, FSCS will calculate the amount by reference to what it would cost to buy the same plan on today’s market.
Next steps
If you would like to discuss your funeral plan requirements, we can help you book a no-obligation appointment with our trusted funeral plan partner who offer Choice Funeral Plans. Just click on this link to book now.