Everything you need to know about funeral plans
By the end of 2019, over 2 million funeral plans had been sold in the UK since 2002, according to the Funeral Planning Authority1.
However, there is still some uncertainty around funeral plans – what they are, how they work and how secure your money is.
Read on as we answer some of the most commonly asked questions.
Q: What exactly is a funeral plan?
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A funeral plan allows you to pay towards your funeral in advance and at today’s price. It’s a way of taking control of the unexpected, setting out the arrangements you would like including any personal wishes, and limiting the costs.
It’s practical, sensible and an essential consideration for anyone's financial end-of-life planning.
The most comprehensive plans guarantee that the services included in the plan are covered. This means that there is nothing extra to pay for the services included in the plan, no matter how far in the future the funeral takes place.
Q: I’ve got savings / life insurance – isn’t this a suitable alternative to pay for my funeral, when the time comes?
Setting aside money in a bank or building society account to cover your funeral costs is a good idea. However, you risk your savings growing at a slower rate than the cost of the funeral you want . As interest rates are currently so low, it’s unlikely that any savings will keep up with the increase in funeral costs we have seen in recent years.
With ‘Over 50s’ life insurance policies, which are sometimes sold as funeral plans, you’re generally committing yourself to pay regular instalments for the rest of your life. Many people end up paying more into their life insurance policy than they would ever get out.
One of the main differences with a funeral plan is that it’s more than just pre-paying for the funeral – a trusted funeral plan provider also delivers that specified funeral as well.
Q: What should I look for in a funeral plan provider?
Firstly, make sure that they’re registered with a professional body, such as the Funeral Planning Authority (FPA), that regulates the operation of prepaid funeral plan providers. Providers that choose to register with the FPA must show that they are consistently operating to a high standard and looking after customer interests properly.
You should also find out who provides the guarantee of the funeral's delivery – a funeral plan is a promise to provide a service in the future, so it will only be as good as the company that stands behind that promise.
It’s important that you trust the company, that they’re financially secure and have an established history.
Q: How can I be sure that my money is securely held?
With a funeral plan, the money you pay today is placed in either a trust fund or an insurance policy, which then pays the funeral director the amount required for the funeral when the time comes. It’s prudent to check where your money will be invested and that it’s secure. It should be held completely independently of both the plan provider and the funeral director. Some firms also publish an annual report.
Q: Can I make personal requests for my funeral?
Some funeral plan providers will allow you to document as much or as little about your personal funeral wishes as you want.
This could be very general information, such as specifying the colour of the funeral flowers, or detailing songs, readings, order of service or location, for example. If any of these personal wishes were to incur a cost, these would normally be met at the time of need. Some funeral plans will allow you to make a contribution towards the cost of the services in advance, to further ease the burden on loved ones at an already stressful time.
Q: Do I have to pay for everything at once and what costs are involved?
Most funeral plan providers will offer you an option of paying in one lump sum, or in instalments over a longer period of time. You can expect the cost of the funeral plan to mirror what an average funeral would cost if it were carried out today.
Be sure to check that the funeral plan is a set price and that, once it’s paid, there are no additional payments to be made for the services outlined in the plan. With some funeral plans, for example those that are linked to a whole-of-life policy or 50-plus life insurance, you may be committing to paying instalments for the rest of your life.
Q: What happens if I die before I finish paying for my funeral plan?
Some funeral plan providers will ask your loved ones to pay the balance owing on your plan.
Others, such as Dignity, will cover your outstanding balance if you pass away before you've finished paying for your plan, as long as you're paying for the plan over more than 12 months.
Radio Times has partnered with Dignity to offer a choice of four Prepaid Funeral Plans. Dignity introduced the UK’s first funeral plan in 1985. Since then over 910,000 people have made provision for funeral costs in advance with Dignity.
Dignity prides itself on being there to help people at one of the most difficult times of their lives. It does this with compassion, openness, care and respect. But perhaps most importantly, the service provided comes highly recommended by the families that Dignity serves. Nearly 98%2 of Dignity planholders surveyed said that they would recommend Dignity to friends and relatives.
• Request your free guide online or call 0800 033 4717 today, quoting RAD130ND, and find out how you can protect both yourself and your family from rising funeral costs.
• When you receive your guide, choose the plan that best suits you and your family's needs and budget.
• You can also personalise your plan, so your family can have peace of mind knowing that they will be following your wishes. You can detail as little or as much as you like3.
• Call Dignity at any time if you have any questions and they will be happy to talk through the plan or payment options with you.
1Funeral Planning Authority, https://funeralplanningauthority.co.uk/about-us/statistics/
2Dignity plc Annual Report & Accounts 2018
3The cost of some special requests are not included in the funeral plan and will need to be paid for separately at the time of need