There’s been lots in the media over the last 12 months about the Government cracking down on misleading pre-paid funeral plans that leave customers out of pocket. So, are funeral plans still worthwhile? Who should take out a plan? How do you make sure your plan covers everything you need and what can you do if something goes wrong?
When it comes to funeral planning, the Sunlife Cost of Dying Research 2018 revealed that only 1% of people making funeral arrangements knew exactly what the deceased person wanted. Almost 50% of those surveyed didn’t know whether to hold a burial or cremation and two thirds were clueless on whether the funeral should be religious or not. A third of people also said they are planning to prepare funds for their funeral but haven’t got around to it.
Thinking about your own funeral is never an easy thing to do but planning ahead can bring real peace of mind and financial security. A pre-paid funeral plan is the easy way to arrange and pay for your funeral in advance, whilst protecting your loved ones against unexpected costs and uncertainty about your final wishes. But how do they work and are they right for everyone? Here are some key points to consider when choosing a funeral plan:
Do you need a funeral plan?
Funeral Plans are designed to help meet the cost of the funeral when you’re gone, so think carefully about your family’s finances. If your estate could cover the cost of a funeral, even with the likely increases, or your family has the money, a basic plan – or even no plan at all – might be the best option. If this is the case, there is no reason why you can’t plan your funeral with your chosen Funeral Director who can offer expert advice and keep your wishes safe until the time comes that they are needed.
A comparison website is a good way of finding a number of suitable plans; FuneralPlanMarket.com for example, compares many of the big providers, so is a good starting point. Remember not all websites will show products from all providers and plans can be complex, so you should examine the policy carefully and phone the provider if you are unsure about any of the details to get the full picture of what’s on offer.
Funeral Plans differ from provider to provider, so do not assume that what is covered by one will be offered by another. Check the detail – be aware that some packages provide contributions that don’t guarantee to fully cover all of the services in the plan. Ensure you understand specifically the contribution towards disbursements i.e. crematorium and church fees, doctors and ministers’ charges. Any costs not covered by your plan will fall to your loved ones.
Do your homework
The Funeral Plan Industry is not regulated by the Financial Conduct Authority, which can leave people vulnerable to rogue firms and that can mean high-pressure selling, losing money paid into plans, and being left with no funeral.
There is an industry voluntary regulator, theFuneral Planning Authority, which companies can choose to sign up to and members must comply with a code of conduct which offers reassurance for people taking out plans. As part of the code, the FPA’s members and the FPA itself pledge that if a provider goes bust, they will look into paying for funerals that are covered by funeral plans. Not all providers are signed up to it, so makes good sense to ensure your funeral provider is registered. If in doubt, contact the FPA on 0345 601 9619 or check its website at funeralplanningauthority.co.uk.
Before choosing a prepaid plan ask the provider to confirm how the money in your plan will be protected. All funeral providers registered with the FPA must place customers’ money into an independently managed trust fund or into a life insurance policy, and your provider should be prepared to send you detail to prove this. The Financial Conduct Authority doesn’t directly regulate funeral plans, but it does have rules to safeguard your money if it is placed in a trust or invested in an insurance policy.
Take your time
Don’t feel pressured to buy a funeral plan over the phone or take the first plan you find. Quality providers will be happy to send you details through the post so that you can consider them in your own time – and do compare what they offer against others. If you know of a Funeral Director you would like to appoint, advise the plan company when you take out the plan and make sure they agree to work with them, don’t let them talk you into using another Funeral Director you are unfamiliar with unless you are satisfied they can offer an equally good service.
Read your documents carefully
While funeral plans cover much of the cost of funerals, there are many items that are exclude, such as headstones and burial plots. Some costs are also capped, such as burial and cremation costs. Read the documents carefully to make sure you understand the plan fully – as well as its limitations – before you buy.
Pay for your policy as quickly as you can
Like many other financial products funeral plan providers give you the option of paying either in instalments or in a lump sum. Most providers give you the option to pay over 12 months to 120 months. Paying in instalments for a long time will cost more because of administration fees and interest. While 12 monthly payments may cost roughly the same, paying over 60 months, for example, can add around 15%-26% to the overall cost.
Using a credit card to pay either in full or installments can offer added protection under Section 75 of the Consumer Credit Act 1974. Under the Act, a credit card provider must protect purchases over £100 if there is a problem with goods and services you have paid for, or if the company you are buying from goes bust. If you are paying for your funeral plan in total upfront, you can benefit from Section 75 protection by putting part of the bill on your credit card. If you want to pay by monthly instalments you can also gain protection by using a credit card to pay any deposits or asking your provider to pay part of the bill upfront using the card.
Talk to your family
It’s really important that family or friends know about the plan you have chosen. Make sure that they understand the detail so that they are clear on your funeral wishes and expectations.