Preparing for the cost of saying goodbye with a Funeral Plan

There are 2 main benefits of taking out a funeral plan, for yourself or someone else:

  1. You pay at today’s rates – no matter how long the person lives after taking out the plan.
  2. It takes away uncertainty and stress from family members at the time of the death.  They know exactly what their loved one would have wanted, and one phonecall to the funeral director is all that is needed.

Did you know:

  • The average cost of a funeral in 2018 was £4,271
  • Funeral Directors’ prices had risen 68% between 2008 and 2018
  • The cost of the essential elements has risen by an average of 6% in the 14 years to 2018

Source CMA Study 2018

What makes up these costs?

  • Funeral director fees
  • The cost of cremation or burial
  • Certificates and celebrant fees
  • Optional elements such as flowers, grave markers and venues

Who pays the costs?

A funeral is counted as a ‘testamentary expense’ which means that it is paid out of the estate of the deceased but in reality you are unlikely to have access to these monies at the time of the funeral so this is usually paid by the family and reclaimed at a later date. In 2017 84.5% of funerals were paid for by the deceased’s family so it’s obviously a very real possibility that you will need to find money for this in the event of a loved one’s passing.

Can a funeral plan help?

A funeral plan is a pre-paid scheme that means that all funeral expenses are paid for in advance so in the event of a death you or your loved ones do not need to find the money for a funeral. Having to deal with the death of a close relative or friend is an incredibly traumatic experience so taking away at least some of this stress can be a very thoughtful thing to do; as well as reliving financial pressure.

A lot of funeral plans operate on the principles of simplicity so this really does make the process easier for those in mourning.

It also means that however must costs rise in the future you know that the essential elements of the funeral are covered.

What should I look for?

Currently the funeral plan industry is largely unregulated so you should look for a provider that voluntarily registers with the Funeral Planning Authority (FPA). There are some key points that you might want to look at:

  • Whether the plan will pay out at any point in the policy or if you have to have paid in a certain amount
  • How the balance will be paid if you die before all instalment payments have been made
  • Levels of cover and what each of these offer
  • Whether you have to use a specific funeral director or list of suppliers
  • How the plan is paid (lump sum or monthly) and whether you have to pay interest
  • How your contributions are protected

I work with the Co-operative to provide Funeral Plans so if you would like to discuss the options with me please feel free to contact me at the details below.