What are prepaid funeral plans?
When you die, one of the last things you want is for your loved ones to worry about how they are going to pay for your funeral.
Prepaid funeral plans exist to help make sure they don’t have such worries.
How they work
Prepaid funeral plans allow you to choose the type of ceremony you want when the time comes, but – critically – also allow you to pay in advance for the funeral director’s services at today’s prices.
In that way, you stand to avoid the almost inevitable effect of inflation in such costs – which are currently increasing at a rate of 4.7%, according to a story published on BT’s website on the 12th of October 2017. Whereas the average cost of a funeral 13 years ago was just £1,920, it has now grown to £4,078 – a figure which far outstrips the rate of inflation.
When you have chosen the plan which delivers the arrangements you want to be made, you pay the funeral plan provider – typically with the choice between a single, one-off payment or in instalments spread over one, or even up to 15 years. In that way, the essential funeral costs are covered, and your relatives are left with no worries about fulfilling your last wishes about the funeral you chose.
What is covered?
Funeral costs depend on the part of the country in which you live and whether you want a simple or more elaborate send-off. Regional variations in costs may be quite marked – as a report in the Telegraph newspaper on the 22nd of August 2017 made clear.
Price is also affected by the range and level of services you choose. It is important, therefore, to establish precisely what any prepaid funeral plan covers.
Typically, these are the essential services usually provided by the funeral director – namely, care of the body and its transport to the funeral home, the provision of a hearse and transport to the burial or cremation site.
Some plans may also make a contribution to the costs of burial or cremation.
Security of funds
If you are paying upfront for services that may not be needed for many years to come, you want reassurance that your money is being kept safe until that time comes.
By choosing a funeral plan provider registered with the industry’s own regulator, the Funeral Planning Authority (FPA), you may rest assured that this security is provided by placing the money you paid into an independent trust fund or the purchase of a whole of life insurance policy in your name.
This represents an additional level of protection and one that you are unlikely to find when arranging a funeral plan directly with your local firm of funeral directors. Although you may still choose the service you want and pay for it in advance, you are unlikely to have any protection against the firm subsequently going out of business – when you may find it difficult to recover the monies you paid in advance.
If your prepaid funeral plan is with an FPA member, however, the provider undertakes to find an alternative firm of funeral directors in your area if the one you originally chose has since gone out of business.