Is a Prepaid Funeral Plan on Your Shopping List?

I’m sure choosing a prepaid funeral plan isn’t the first thing that comes to mind when writing your shopping list but considering soaring funeral costs and the impact arranging a funeral has on the family, it could be one of the smartest moves you make.

Key Points

  • A prepaid funeral plan lets individuals lock in current funeral service prices, shielding against future price hikes, and alleviating the financial and decision-making burden on family members.
  • Over the past decade, funeral costs have surged by over 60%, with current averages at £4,417, potentially rising to £5,200 in five years.
  • It’s advantageous to compare funeral plans to secure the best deal, with some providers offering comprehensive coverage, like Co-op’s coverage of all disbursement costs.
  • Payment options for funeral plans vary, ranging from single lump-sum payments to fixed monthly instalments, with prices influenced by the desired service level and the buyer’s age.
  • An alternative to funeral plans is Life Insurance, which provides a lump sum for funeral arrangements. Guaranteed Over 50 Life Insurance or Regular Whole of Life Insurance are options, though premiums may exceed the eventual payout depending on the policyholder’s lifespan.

What is a Prepaid funeral Plan

A prepaid funeral plan allows individuals to pre-pay for their funeral services at today’s prices, safeguarding against future cost increases. By choosing and paying for their funeral arrangements in advance, individuals can alleviate the financial and decision-making burden on their loved ones when the time comes.

These plans can cover various services, including the ceremony, coffin, and burial or cremation. In the UK they are regulated by the Financial Conduct Authority, ensuring providers maintain certain standards and protections for customers.

Why Get a Funeral Plan?

There are many reasons why getting a prepaid funeral plan can be a good idea. Here are some of the most common reasons:

  • Peace of mind: A prepaid funeral plan can give you peace of mind knowing that your funeral arrangements are taken care of, and your loved ones will not have to worry about making decisions or paying for the funeral.
  • Cost savings: Funeral costs can be expensive, and prepaid funeral plans can help you lock in prices today, saving you money in the long run.
  • Control: A prepaid funeral plan gives you control over the details of your funeral, such as the type of service, the location, and the services and products you want included.
  • Flexibility: Many prepaid funeral plans are available, so you can find one that fits your needs and budget.
  • Tax benefits: In some cases, depending where you live, you may be able to deduct the cost of a prepaid funeral plan from your taxes.
A calculator and notepad

Freeze Rising Funeral Costs

Prepaid funeral plans allow you to plan your own funeral in advance, and freeze today’s funeral price.

This is possible because, for some time now, funeral plan providers will guarantee their funeral services included in your plan. The price you pay is fixed, which means that no matter how much prices rise, your funeral will go ahead as planned without anything extra for your loved ones to pay.

In the last decade, funeral prices have risen over 60%, and we now pay on average £4,417 to say good bye to our loved ones. If funeral costs continue to rise in this way, we could be paying more than £5,200 for a funeral in just 5 years’ time.

Shop Around to Get the Best Deal

The other advantage of doing everything yourself in advance is the fact that you are more likely to shop around and compare funeral plans for the best deal; something families may not have the time or frame of mind to do.

Also, many families spend unnecessarily due to the pressure of arranging the perfect end of life ceremony for a deceased loved one.

With the increase in availability online, not only are funeral plans more accessible, there is now more competition which means a number of companies offer various incentives.

Working on a laptop

For example, Co-op funeral plans offer to cover all funeral disbursement costs – which include fees for the minister, doctor and fees for cremation or burial. Some funeral plans only offer a contribution towards disbursements costs, so that your family would need to cover the remaining balance of these at the time of the funeral.

Using a free broker, such as Reassured, could help you save money by comparing funeral plan quotes on your behalf.

Here are other steps you should take to get an excellent prepaid funeral plan:

  1. Do your research: Read online reviews, talk to friends and family who have purchased funeral plans, or contact a funeral home or insurance company for more information.
  2. Understand your needs: Consider factors such as the type of funeral you want, the location, and the services and products you want included.
  3. Consider your budget: Funeral plans can vary widely in price. It’s essential to set a budget and stick to it.
  4. Read the fine print: Before you sign any contracts, read the terms of the plan, the cancellation policy, and the refund policy.
  5. Choose a reputable company: Always go with a reputable company with a good reputation. Also check that they are authorised with the FCA.

Paying for the Funeral Plan

These days there are a number of ways to pay for a funeral plan, making them more affordable to a much wider audience. You can choose to pay in full with a single payment of between £3,000 to £4,000 depending on the level of service you buy; pay by instalments over 1, 3, 5 and 10 years or opt for lower fixed monthly payments up to 30 years from £19.80 per month depending on your age.

Life Insurance: An Alternative Solution

If you want to keep your monthly costs a little lower or prefer to leave your family with a cash lump sum so they can make the arrangements, you could choose a Life Insurance Plan.

A Guaranteed Over 50 Life Insurance plan may be worth considering if you are looking for a simple plan that guarantees to cover you regardless of the state of your health. Premiums start from around £7 a month and you are fully covered for the cash sum after an initial period of 1 to 2 years; however keep in mind that as the amount of life cover is fixed, inflation will reduce its value over time. And unlike with a funeral plan, the cash sum will be vulnerable to rising funeral costs.

A calculator and a looking glass

If you are in good health and happy to complete an application that includes health and lifestyle questions, then it may be worth comparing quotes for Regular Whole of Life Insurance.

The process does take longer and there is a chance you may not be accepted particularly if you have any pre-existing medical conditions, (in which case you could still apply for the guaranteed over 50 plan) however if your application is accepted, you’d be covered for the full cash sum immediately and the money paid out could be at least 40% more, so more money for your family when the time comes.

Paying Life Insurance Premiums for Life

Both Guaranteed Over 50 Life Insurance and Whole of Life Insurance require premium payments for life or until your 90th birthday, therefore there is a chance you could pay in more than the cash sum paid out; it all depends on how long you live.

Either buying a prepaid funeral plan or arranging a Life Insurance plan will minimise the financial and emotional impact of your passing.

This article was written for MoneyHighStreet by award-winning life insurance broker Reassured, authorised and regulated by the Financial Conduct Authority.

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