Unfortunately, death is inevitable. While the topic isn’t one most people like to dwell on, some early planning and preparation is important to alleviate stress, financial and otherwise, for your surviving loved ones. One option many in the UK turn to are pre paid funerals.
Also known as a funeral care plan, prepaid funerals are for anyone who wants to pre pay for their funeral expenses well before they’re necessary. There are a few reasons why you’d want a funeral prepayment plan:
Funeral prepayment plans can be purchased directly from a funeral director or from a specialised funeral-plan provider. Some people prefer to purchase directly from the funeral home, as these are often the best value funeral plans. Other people find a provider is easier for funeral plan comparison.
Not all prepaid end-of-life plans are the same. Some offer elaborate services while others just have the basics. Most plans in the U.K. aim for a middle-of-the-road compromise between services and cost.
Some common services found in most plans include:
Burial services are commonly not found in a prepaid plan, at least not entirely. Instead, many providers offer partial cost coverage for burial. Some plans cover cremation entirely but only a portion of burial. This is because burial plots will increase in price over time where cremation costs remain much more consistent.
Most plans offer additional services for additional costs. If you want a high quality coffin, extra limousines, floral arrangements or other extras most funeral program providers will work with you.
Pre burial plans usually have two payment options. You can pay for the funeral in advance by simply paying the entire cost upfront. Most places will also let you pay in monthly instalments, too. You can spread payments out anywhere from one up to 10 years.
Guaranteed funeral plans, on average, cost anywhere between £3,456 and £7,600. The exact price depends on a variety of individual factors regarding your specific funeral plans. Also, the earlier you pay for your funeral in advance, the better value you’ll get because you’ll be able to stay a bit ahead of inflation.
Keep an eye out for the terms “guaranteed payment.” This means that the entire burial, cremation or other service is covered by the provider. The other option is “partial payment,” which is where the estate of the deceased will have to cover any additional costs.
Be sure to make a note of any cancellation fees, especially if you’re purchasing a plan at a younger age. An unexpected move to another city could make your funeral plans not feasible. If you do have to cancel, you don’t want to be hit by high fees.
Prepaid burial plans aren’t the only way to afford a funeral. A standard savings account is another option. Unfortunately, unless you start saving early, the interest you gain in the account is unlikely to match the rising rate of inflation. So a savings account is unlikely to make financial sense for many people.
U.K. law allows for the cost of funeral plans to be paid for directly from the estate of the deceased. A relative or spouse needs to show the bank both a death certificate and an itemised bill from the funeral director. The money taken out of any account can only go to the funeral plans cost. This means rent, utilities and other expenses might need to be covered in some other way until the estate can be legally distributed.
Pre payment funeral plans have advantages over both savings accounts and direct estate withdrawals. There are many reasons why:
Inflation causes the price of basically, well, everything to rise over time. This includes many of the products and services associated with funerals. If you can pay now for a “guaranteed rate” you’ll get a better deal on a coffin, funeral service, body transportation and more. The earlier you pre pay funeral expenses the more you’ll save.
You don’t have to pay for the entire funeral today. The best pre pay funerals offer flexible options to pay small sums over time. Monthly payment care plans are a great way for someone with a small budget to pay for their entire funeral by the time they’ll need the services.
Your death will be traumatic enough for your loved ones. There’s no need to add additional stress by making them choose all of your funeral arrangements while they’re also grieving. The more you can pay for your funeral in advance, the better. Plus, you’re guaranteed to have the funeral you want, as extravagant or simple as that may be.
Some people want their funeral to be a solemn, religious affair. Others want a laugh-filled party. When you purchase a funeral plan, you have the opportunity to plan the event exactly. This includes a significant amount of control over the cost. If you want to keep costs down, but you think your family wants to spend, pre purchasing a funeral plan can control expenses.
Although it’s not a pretty thought, death isn’t always the only reason you need to make funeral plans. As many people grow older, they run the risk of dementia, stroke and other loss of both physical and mental faculties.
Creating a clear plan of what type of care you want is an important, but often overlooked, aspect of end-of-life planning. You’ll want to nominate a Lasting Power of Attorney. This person is usually a spouse or adult child. Becoming an LPA can easily be done online. They’re allowed to legally make decisions on your behalf if your ability to do so yourself is compromised.
Of course, you’ll need to make your wishes clear when you’re still of sound mind and body. The earlier the better. Amending your decisions after suffering from some type of mental impairment presents some legal challenges.
Ideally, a prepaid burial plan is purchased years, if not decades, before it’s needed. The concern is to make sure that the policy issuer is still able to honour the policy. After all, you don’t want to be greeted with an “out of service” tone on the day you need to ring the funeral parlour.
First, you want to check out the reputation of the funeral home. Are they able to meet their earlier commitments today? Do they have a long history of business, and seem both professional and financially sound?
Once you’ve chosen to purchase a plan you can arrange for monthly payments or pay the entire cost at once. Either way, your money will be kept in one of two possible locations:
The Financial Conduct Authority offers some protection for consumers here. While the FCA doesn’t regulate funeral prepaid plans directly, they do oversee money in trusts and insurance policies. This offers a layer of government protection if there’s ever a problem.
There’s another legal provision involved here, too. The Consumer Credit Act of 1974, section 75, protects consumers who purchase over £100 using a credit card. Putting prepaid funeral expenses on your credit card offers you some additional legal protection. This applies to both full payments and monthly payments
Finally, you should consider purchasing services only from members of the Funeral Planning Authority. This is the professional association for funeral service providers. They adhere to a strict code of conduct. If a member of the FPA is unable to meet his or her commitments, other members will step forward to help and provide services as necessary.
The best plan is the one which fits your needs. Here are some factors to consider:
For many people, the cost of the funeral plan is an initial concern. Fortunately, this concern is often unfounded. Cheap funeral plans are often a perfectly fine option. Even if you’re only purchasing the most basic services, a pre payment funeral care plan will still save you some money overall. Monthly funeral plans make services affordable for practically any budget.
Funeral plans for over 50 in age are different than funeral plans for under 50 in age. An over 50 plan pays out a fixed lump sum upon death. However, these plans are not always a great deal. If you live a long time, you could end up paying more in premiums than the eventual pay out.
In some cases, you might not want to pre purchase any type of funeral plan. If your heirs don’t need access to your money right away, and you have a thorough will detailing your wishes, pre purchasing a plan might not be worth the trouble. Note that this is not a common scenario, however. Even if money is not much of an issue, most people prefer a pre pay funeral in order to ease the burden on their surviving friends and family.
The types of issues you need to prepare for depends on your family’s specific needs. If you normally pay the monthly bills, then your family will need to know how to access those accounts. A Financial Factsheet is useful here.
A Financial Factsheet is a document detailing the various financial accounts your family will need to know about. You’ll also want to detail all the household services such as electricity, milk delivery and even Netflix. The members of your household will need to know about all reoccurring bills in your name.
Picking which funeral plan will work best requires you to analyse each of the above factors. Most likely, you’ll want to choose some type of plan. Depending on your current age and financial status, you can make low monthly payments and save money on your funeral plans.
I wasn’t really looking to plan my own funeral. So at first I concentrated solely on helping my parents pay for a funeral in advance. Together, we sorted through many funeral plan quotes. There were many funeral plans for over 60 but we eventually settled on a prepaid cremation plan for my dad and a burial service with various prepaid funeral arrangements for mum if she was the first to die.
After that was all settled, I decided to look into prepayment funerals for under 50s. This was for myself. My children are very young, so they wouldn’t be planning a funeral anyway. But why put my family through the hassle? I started my search by only considering guaranteed funeral plans. This way my family wouldn’t have to pay additional fees down the road.
I found what I feel is the best funeral plan for under 50. Using a funeral savings plan allows me to make small monthly payments. The entire process was surprisingly comfortable. Instead of making me feel depressed or afraid, I was actually relieved that something so important for my family was now taken care. After explaining this to my wife, we decided to pre pay funeral expenses for her, too. Now we have joint funeral plans. This saved us a bit of money as well as makes our personal record-keeping easy.
As it turns out, my uncle left a blessing in disguise. A good portion of my entire family, including much of my extended family, has purchased funeral plans. This has brought us all peace of mind – while also saving everyone some money, too.