One thing many people worry about is that when they die, there won’t be enough money left in their estate to pay for their funeral. What this would mean is that loved ones left behind are left with the bill.
Funeral plans are a way of arranging and paying for your funeral in advance. This means you get peace of mind knowing that most of your funeral costs will be taken care of and your wishes are going to be respected.
What is a Funeral Plan?
A funeral plan is a way of paying in advance for some of your funeral. You pay at today’s prices and purchase a plan from a funeral plan provider or funeral director.
The money you pay is only used to pay for funeral costs. You can decide what’s included in your funeral plan. Once you’ve made that decision, you pay for the plan in one lump sum or monthly payments over an agreed period.
Instalments can be made over one to ten years, but this option will cost more in the long run, because of interest and administration fees that are extra.
What Are The Benefits of a Funeral Plan?
Before you decide whether a funeral plan is right for you, you must consider the benefits of getting one. Checking the disadvantages is just as important.
The benefits of a funeral plan include:
- It protects you against inflation. Funeral costs may go up, but your funeral plan isn’t affected.
- Funeral plans are regulated by the UK’s Financial Conduct Authority which means you’ll get the funeral you paid for and your money is protected.
- If your estate is liable for Inheritance Tax, it’s good to know that your funeral plan is not counted as an asset.
- The money you’ve used to pay for your plan is not included when you’re assessed for any means-tested benefits or care costs.
Are There Any Disadvantages?
The downsides of a funeral plan are as follows:
- Generally, funeral plans don’t cover all the costs of a funeral. Anything not covered will have to be paid for out of your estate. If there’s not enough money in your estate, the executor or person organising your funeral is liable for the outstanding cost.
- You might choose a cheaper plan because you want to save money, however, it means you’ll have less control over the costs your plan covers. For example, there might be a limited choice of funeral directors, you won’t be able to have the funeral you want, or there could be constraints on the date, location, and time of your funeral.
- If the person making the funeral arrangements wants to make changes, they’ll have to cover any additional costs.
What is Included in a Funeral Plan?
How much a funeral costs varies considerably, depending on the type of funeral you want and any extras. All plans include the cost of a funeral director. They will take care of the body, arrange the funeral, and organise transport of the body to its final resting place.
The cost of a funeral plan is also affected by several things. For example:
- The type of funeral and ceremony you want to have
- What type of coffin you’d prefer
- Every provider is different
- Local costs vary, so where you live also impacts the cost
The cost of a funeral plan starts from around £2500 but could be as much as £5000. Burial plans tend to cost more than cremation plans. However, if you chose a direct cremation without a ceremony, the cost of your funeral plan could be as low as £1500.
What Are the Different Types?
Funeral Plan providers typically offer three different types:
- Basic: This type of plan should just about cover the cost of a cremation or burial. There may be funeral time and date restrictions and loved ones may not be able to view the body.
- Standard: As well as the cover provided by a basic plan, this type of plan might also cover the cost of a limousine for the funeral procession and basic coffin.
- Comprehensive: This is the most expensive type of funeral plan. Generally, it would cover the cost of a more expensive coffin, funeral procession limousines, transporting guests to the funeral, more flexibility for viewing the body, and other extras.
Final Thoughts
Making provision for end of life makes sense and that includes planning your funeral. But is it right to buy a prepaid funeral plan?
The bottom line is that they are a way of ensuring your loved ones are protected in the future against rising funeral costs and the worry of planning your funeral.
However, only you can decide whether it is right for you. It depends on your situation and budget. There are lots of benefits, but alongside those are a few downsides. It’s down to you to weigh up the pros and cons and decide for yourself.