Your Guide to Financing Your Funeral with a Funeral Plan
Many people choose to finance their funeral in advance, to relieve their families of the financial burden during a difficult time. The two most popular ways of paying for a funeral ahead of time are funeral plans and Over-50s plans.
Here are a few things you should know before taking out one:
Why Choose A Funeral Plan?
For some, leaving the burden of covering funeral costs to their loved ones keeps them up at night. If you’re concerned your family may not have enough money to cover the funeral expenses, or may not know your wishes for the service, you may consider taking out a funeral plan.
A funeral plan is paid for in advance and allows you to specify your funeral arrangements. This means your family won’t have to cover the entire cost. Funeral plans can also be taken out to cover loved ones.
How Do Funeral Plans Work?
Most funeral plans will allow you to pay for the funeral arrangements at the current price, which protects you from funeral services’ rising cost. The plan can be paid in instalments or a lump sum.
What’s Included in a Funeral Plan?
All funeral plans include the services of a funeral director, who makes the arrangements. Depending on your funeral plan, some services may be excluded. Most funeral plans will cover some third-party costs, such as cremation or the officiant’s fees, but they are not likely to cover these costs in full.
Vendors such as florists are not usually covered by funeral plans, and the plan does not usually cover a wake.
Speak to your funeral plan provider to break down what will be covered in the plan before you purchase it.
Did You Know?
Burial funeral plans usually cover the cost of digging the grave, but not the cost of the burial and headstone.
Are Funeral Plans Safe?
At the moment, funeral plans aren’t regulated. Most funeral plan providers do, however, comply with Funeral Planning Authority (FPA)1, a voluntary regulator. The FPA may not offer the same consumer protection as a government regulator, but members must uphold a set of standards. The FPA also deals with complaints from consumers.
Your money must either be invested in a trust fund or an insurance policy. This is then used to pay for the funeral.
The funeral plan industry could soon become regulated, as the government has announced the intention to have the Financial Conduct Authority oversee funeral plan providers.
Protect yourself with the following:
- Ensure your funeral plan is approved by the FPA
- Use a credit card to pay for your funeral plan in a lump sum. Your credit card offers you additional protection if things go wrong, even if you pay only a small amount to the funeral director.
Keep in Mind
Should you pass away before you’ve paid off the instalments on your funeral plan, your family or estate will be liable for the balance.
What to Ask Your Funeral Plan Provider
Before you purchase a funeral plan, make sure you have all the details. It’s best to be clear on precisely what your funeral plan will cover, rather than leaving your family footing a hefty bill after your death.
Consider asking your funeral plan provider the following questions:
- What are the cancellation fees, and can you change your plan at a later date?
- What is included and excluded in your funeral plan?
- What other funeral expenses are likely to crop up, and how can these be paid for?
- Will you be able to select your funeral director?
- What does the funeral plan cover if the deceased is in another country when they die?
- What happens if you still own payment on the funeral plan when you die?
- Are you able to change the details of your funeral plan?
- What is the period of your instalments, and do you have to pay interest?
Alternatives to Funeral Plans
There are other means to save for a funeral besides funeral plans. You may consider one of the following options to fund your funeral.
Putting funds aside in a savings account is usually the simplest way to save for your funeral. However, the downside of this is that you may not be able to save enough to cover your funeral, especially with rising funeral prices.
In your will, you can specify that you would like the proceeds of your assets to cover the funeral’s expense. However, it can take time for assets, such as property, to be sold, and you may need a family member to pay for the funeral upfront. They can then claim back from the estate.
Death in Service Benefits
Your employer may offer your family pay-out if you die while you’re employed by them. You could also get benefits from any trade union, association, or professional body you belong to.
Your beneficiaries may wish to use your life insurance policy lump sum payment to cover funeral expenses. However, payments are usually made around a month after death, or longer. This means your family would have to have the funds upfront to pay for the funeral.
The government offers various support programs for low-income earners. This could be through Funeral Expenses Payment grant or Bereavement Support Payment.
A Few Common Questions
Funeral plans can offer you the peace of mind that the arrangements after your death will be taken care of. However, it’s best to consult with your funeral plan provider to ensure you understand the details and inclusions of your specific plan.