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Prepaid funeral plans: how do they work?

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Death is something that a lot of people don’t like to think about, but the reality is we will all die one day and we never know when.

All though people don’t want to discuss it or think about it, it’s worth spending some time giving thought to what you want to happen when you die.

This is so important so your loved ones can follow your wishes such as whether you wish to be buried or cremated.  If you don’t express your wishes before you die, then someone else will have to decide for you.

The same goes with the funeral.  If you have any special requests or want it a certain way, or even to leave a message to be read at your funeral, then you will, of course, need to decide and plan this in advance.

Not only will your funeral wishes be followed if you plan them in advance, but you can even pay for your funeral, or towards it, to ensure your family don’t struggle with the funeral costs on your passing.

It’s all worth thinking about as it’s something that will eventually happen to all of us.  If you have children then how will they pay for your funeral?  Do they know whether you want to be buried or cremated?

One way to plan ahead and ensure everything is taken care of with regards to your own funeral, is to take out a funeral plan.

What is a funeral plan?

A funeral plan essentially allows you to pay for your chosen funeral in advance for a fixed price.  You can pay the fee in a lump sum or spread the cost over several years.

It might not include absolutely everything you need for a funeral, so you’ll have to compare different funeral plan packages and see what exactly is covered.

Many funeral plans will at least cover movement of the body, preparation of the body, a coffin and transport.  Then you may need to add on additional services as extras.

Which? say “At its simplest, a funeral plan allows you to pay upfront for your funeral so your relatives don't have to cover the costs themselves - although they are allowed to pay for your funeral using money from your estate as soon as you die (and it's not subject to inheritance tax).”

What is the benefit of a prepaid funeral plan?

One benefit of a prepaid funeral plan is the price of the funeral won’t increase with inflation.  The average cost of a funeral rises every year, so by paying for your funeral in advance, possibly even decades in advance, you will pay a better price for your funeral than if you wait.

It also means your loved ones don’t have to take the costs out of their inheritance and it’s one less thing for them to worry about when you die.

Heart of England Funeral care say “Funeral prices may be increasing every year, but our Pre-Paid Funeral Plans are fully guaranteed. That means you can fix your price now, and pay less than you might later. Our plans also allow your loved ones to arrange and pay for additional services and requests when the time comes.”

Another great benefit is having your wishes granted.  Unless you have expressed exactly what you want to happen with your body and at your funeral when you die, then no one will know.  If you plan your own funeral then you can choose exactly what happens and there will be no guesswork.

How do funeral plans work?

There are different types of funeral plans available.  Many companies offer different packages so you can pick the package that suit your needs. 

Alternatively, you can choose a tailor made service with a price on arrangement, allowing you to pick your own funeral stationery, flowers, music and transport whilst adding extra services like more limousines than you might get on a pre-designed package.

You really can design every detail of your funeral to save your loved ones the hassle in their bereavement if you pick a comprehensive funeral plan.  It also means your wishes are granted for your funeral as you’ve designed every detail yourself and your family don’t to stress over the finer details of what you’d have liked or wanted.

How much does a funeral plan cost?

Funeral plans typically cost between £3000 and £5000 in 2021. 

Costs of funerals do rise each year, so these prices will rise.

As mentioned above, one benefit is to prepay for your funeral to beat any rising costs in the future due to inflation.

Do I need a funeral plan?

There are other ways to pay for a funeral such as from savings or an over-50s life insurance, however these may not keep up with inflation costs, so a funeral plan might work out better value.

Your estate can also be used to pay for funeral costs, but this will reduce the inheritance your loved ones receive.

Is my money protected in a funeral plan?

At present, in January 2021, funeral plans aren’t regulated by the Financial Conduct Authority (FCA), but there are plans to bring them under regulation.

Money Advice Service recommends paying for all or part of your funeral plan on a credit card to ensure you are protected by Section 75: “When you pay with your credit card, you can get extra protection if things go wrong with the funeral director. You could also get this protection if you were to pay at least £100 on your credit card, and then pay the rest in instalments.”