A prepaid funeral plan is just that – it is your plan for what happens when you die in the arrangements for your funeral and presents the opportunity of paying for that service in advance.
Why do I need one?
There are two main reasons for choosing to buy a prepaid funeral plan:
- it gives you the reassurance and security of knowing that the arrangements have been made and your last wishes are going to be respected when your time comes – rather than leaving such potentially difficult decisions to your family or friends; and
- by paying now, you pay less than is going to be necessary in the future, once inflation and other increases in funeral costs have had their effect.
The Royal London National Funeral Cost Index Report 2016 found that the average cost of a funeral in that year was £3,675 (the average cost of a burial being £4,136 and for a cremation £3,214).
With fewer than 50% of the population owning savings of more than just £3,000 and the average total debt of such individuals reaching more than £30,000, says The Money Charity, it is easy to see why the cost of a relative’s funeral tips many people into a spiral of ever-increasing debt.
Where can I buy one?
Prepaid funeral plans may be bought directly from your local firm of funeral directors or from a national provider of funeral plans.
Although the physical presence of the undertakers close to your home might appear comforting, there is a risk that, after you have paid for your funeral service in advance, the firm fails and goes out of business before your time comes. You might be joining a long list of other creditors in trying to recover the money you have paid over.
A national provider, therefore, might prove the safer bet. Such a provider is more likely to belong to the Funeral Planning Authority (FPA). The FPA’s formal Code of Practice – to which all providers sign up – makes provision for help for customers who had made arrangements with a funeral director who has since gone out of business.
Is my money safe?
It may be all very well paying in advance for funeral services, but what if these costs more – as they are almost certain to do – by the time the ceremony needs to be held?
Once again, this an issue which a national provider and one backed by membership of the FPA addresses in a safe and secure way. The prepayment you make – whether that has been all in one sum or spread out over several instalments – is typically placed in trust on your behalf, or the funds are applied to the purchase of a whole of life insurance policy in your name, which pays out a predetermined sum when you die.
Not only is your money safe, therefore, but prepaid funeral plans give you the freedom and reassurance of being able to plan what happens at your funeral, in the certain knowledge that the funeral directors’ fees have already been paid.