Funeral Plans & Funeral Insurance

Why Select A Funeral Plan Payment Scheme?

  • It appears that many people struggle to find lump sums of money to pay cash at the time of a relative's sudden death.
  • Even if the death is known to be soon, paying for funeral costs on top of care costs can also be a burden for a family.
  • Paying for a funeral is a concern mainly because they don't wish their family to have to inherit the costs or go through undue stress trying to manipulate the remaining estate to extract the funds to pay.
  • The solution therefore is obvious, put the money somewhere safe to cover your own funeral costs or pay in advance for the funeral.
  • A pre paid funeral can be set up by almost anybody if under age 80 and over 18, for themselves, for a family member or a best friend or work colleague.
  • A funeral plan via a funeral director or company is not the only way to cover costs for a funeral in advance.
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How Do Pre Paid Funeral Plans Work And Who Benefits?

Funeral plans are relatively easy to understand as long as you know that the money doesn’t lay around idle for umpteen years, as you can probably do that yourself. 

 

When a funeral plan is taken out you will pay instalments for two to ten years, or a lump sum to one of the major funeral plan providers.

  • Assurance policy:

    Insurance is for events that might happen. Assurance is for events that are definitely going to happen but they provide you cover anyway. Money will be invested by a very large financial group that invests in companies on the stock market to see returns, which go on to pay for your funeral at the higher cost in the coming years. Don't worry, they certainly make a profit on the money they hold for you.
  • Trust funds:

    A trust is a little bit different but functions along similar lines. Your money is protected by a trustee and audited annually. Your money earns in two ways. The company holding the fund creams off interest payments which are then used to invest and top up your fund. The second...
  • To expand our understanding further, funeral directors and the financial company need to make money, as industry professionals term these 'pre-need contracts.' With this pre paid plan contract, a business can take out a life insurance policy on you with the beneficiary being themselves or the funeral director. It's a way of underwriting but also profiting. Directors can also earn referral fees for each step.

Does A Funeral Plan Cover All Funeral Related Items?

Few of us actually shop properly for a funeral when a death happens, the most commonly known Funeral Director shows up, we may glance and compare prices to start with however none of us go out of our way to truly drill down on all aspects of a funeral properly. We are in a state of shock and grieving.

Essentially a funeral plan does allow us time to choose and compare funeral plan options. For instance if you look at three separate funeral directors and their plan offerings they may have different packages. Coffins will be different styles or made from cheaper to more luxurious woods, then there’s the lining but not all packages and inclusions will be the same.

Without a doubt burial costs tend to be excluded because land rates are so volatile, they increase more than funerals have in relation to inflation. Graveyards and cemeteries experience land lease rate increases as much as anyone else. Each divided into plots so over time increases exponentially.

Some however will contribute to burial costs up to a set sum, as it is a gauge of how much it may be. If a plan is cheaper, consider this to be the reason why. The remainder of that particular amount will be met by the family at the time. Pall bearers and transportation can be written in and paid for but very few deal with additions such as flowers.

Plan Paid. Is That Money Really Safe For Thirty Years?

At which end of the process? It would be fantastic to be 100% sure all of your money is safe and that most definitely calculations will prove correct and all funeral costs will be met absolutely. The funeral plan industry is overseen by the Funeral Plan Authority (FPA) which has set in places Rules and a Code of Practice but not all have to be members.

There have been incidences where the final sum of a pre paid plan has either been less than what was required and known when sold and also that not all aspects of a funeral as stated were covered. In that respect you need to compare these companies and contact the FPA firstly for recommendations and secondly if need to make a complaint about their activity.

As for money paid into a reputable trust water marked FPA membership Funeral Director or pre paid funeral plan company, yes in the main very secure. Firstly the FPA audits each company under its remit and checks that trust fund and investments are protected correctly.

Furthermore while the Financial Conduct Authority (FCA) has no direct oversight over pre paid funeral activity, anything that stems from the trust funds to the stock market motivation is, so companies tend to apply both FCA and FPA rules and practices just in case.

External to pre paid plans: if you were to pay monthly instalments or whole amounts to a Funeral Director directly, if you pay by credit card you are afforded certain rights under Section 75 of the Consumer Credit Act, if there is reason to complain a full or part refund could occur.

Are There Questions That Should Be Asked Of A Plan Provider?

It is never always possible to remember all the questions you need to ask during a meeting. Or even comprehend all the answers on the day. Here’s a quick run down to help you find the right pre paid funeral for you and your family considering different situations that can occur.
  • What time period do I have to cancel and do I get all my money back?
  • Will you detail everything in the plan, state what is not and or ensure I know potential costs that will need to be covered at the time.
  • What happens if a named local funeral director goes out of business?
  • What happens to the pre paid funeral plan if I move house?
  • What happens if the company goes out of business?
  • If a person the plan is for dies abroad, can a funeral occur there or does the policy repatriate? - Can I change details of the plan and how often?
  • How does anybody know, at the time of death, about the funeral plan?
  • How does the funeral plan company know the person has died so as to provide the funding?
  • If a plan is currently being paid by instalments and the payee suddenly dies, does the funeral proceed, is there part payment, no payment?
  • Does a funeral director or family have an option to alter the arrangements that were paid for? Either against or complimenting the deceased's wishes.

Should You Choose Funeral Assurance Or An Over 50s Insurance Policy?

As explained, there are insurance policies, assurance policies and prepaid plans for funerals. Insurance companies offer a package which is termed the Over 50’s Plan. 

 

It essentially provides for a fixed sum upon your death to either contribute towards a funeral or as a cash sum to a loved one.

While it is possible some vendors have changed policy details to be more correct, there have been some inherent issues with these plans that you should be made aware of:
  • The value of the payout will not change to meet an increase in funeral fees over the years, it may fall short of the required amount to dispose of funeral services.
  • Secondly, while they may offer payment holidays if you miss a payment you are in danger of losing the entire policy, some of which do not have cut off dates. So you could effectively be paying monthly until the day you die, touch wood you live a lot longer but there's little point paying more continually than you'll ever receive.
  • It's buyer beware territory. After all, if it's more beneficial to keep money in a savings account for forty years even with today's low interest rates, why lose money with an Over 50s funeral plan if it's not directly benefiting you and only the company. Compare plans and be wise about the policy details and any cancellation fees.

Ensuring The Final Plan Is Covered And Known...

  • There is little point arranging any kind of funeral plan unless you put details in a Will, put people as next of kins in policies or generally letting family and friends know – or even the local funeral director your family solicitor.
 
  • No matter which plan you choose you will receive a document that is not only a proof of purchase but enables you to update details whenever possible. Put this somewhere safe.
 
  • Any plan provider should have clearly stated terms and conditions, as well as a properly defined complaints procedure. As none of them wish you to turn to CAB, FCA or FPA where they may get into even bigger trouble!

Are There Other Ways To Pay For A Funeral?

Alternatives to funeral insurance and a funeral plan is the traditional way of paying for a funeral that also doesn’t rely on family footing the bill. Take your current and savings account as an example.

 

You have probably named a family member or relative as the Executor of the Estate. After Probate is recognised and even before, they will be able to access your accounts via the Bank or Building Society and ask for the amount to cover funeral costs. A person can also instruct a solicitor to do likewise in the event of their death.

 

Inheritance tax can also be a problem in some situations, having a funeral bill deducted from the total will ensure less tax is paid. You may also have your own stocks and shares which could also be sold to pay for a funeral.

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“The free call that I got from FuneralGuide 
helped me to decide that

I didn’t want to leave my kids with that kind of burden.”

Steve Bailey, Hertfordshire
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