Funeral plans: an essential guide

Funeral plans can provide peace of mind that when you pass away your funeral bills will be paid for, saving your loved ones the worry of covering costs

Lifestyle, Seniors

Funeral plans can provide peace of mind that when you pass away your funeral bills will be paid for, the costs are fixed at today’s prices, and they save your loved ones the worry of covering costs.

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However, it’s vital to do plenty of research if you’re considering buying this type of plan, to make sure everything you want is covered, or whether there are alternative ways to pay for your funeral which suit you better. Here’s our guide to some of things you need to be aware of.

Check what is and isn’t included

You should be able to leave instructions on arrangements for the service, such as where you would like it to be held, flowers and hymns to include.

Always read the small-print carefully before buying a funeral plan, so that your loved ones aren’t left facing any unexpected extra charges.

Most funeral plan providers will allow you to choose either a cremation or a burial plan. These will typically include a coffin, care of the body until the funeral, including transport of the body to the funeral home, and a minister to conduct the ceremony, but there might be extra costs to meet for a burial.

Find out how your money will be protected

Funeral plans aren’t currently regulated, which means when you buy a funeral plan your money isn’t protected by the Financial Services Compensation Scheme (FSCS). However, funeral plan providers who are registered with the Funeral Planning Authority, a voluntary organisation set up by the funeral planning industry, must abide by a strict Code of Practice. Under these rules, any payment made by customers must be kept separately from the funeral plan provider and placed either into a whole of life insurance policy or an independently managed trust fund.

The FPA will also make sure that your funeral plan provider has invested your money properly. If you want extra peace of mind, it’s a good idea to pay for your funeral plan using a credit card, as this will give you additional protection if something goes wrong. When you pay using a credit card, under Section 75 of the Consumer Credit Act, the card provider is jointly liable with the plan provider to reimburse your money if it doesn’t deliver the service you paid for.

Funeral plans aren’t the same as over-50s insurance plans

If you’re planning on buying a funeral plan, don’t confuse them with over-50s insurance plans.

Whereas funeral plans will guarantee to cover funeral expenses, with costs frozen at today’s prices, over-50s insurance plans will pay out a lump sum when you die in return for you paying monthly premiums for the remainder of your life.

If you die soon after taking out a policy, then this type of plan will work in your favour financially, but if you live for a long time, you risk paying much more into your plan than it will ever pay out.

Look into alternative ways to cover funeral costs

Funeral plans are not the only way to ensure your funeral costs will be covered when you die. For example, you could set up a savings account specifically for your funeral which you can pay into every month.

Remember to let your loved ones know about the account, so they know where the money is when the time comes. You may want to consider setting it up jointly with a family member – that way they’ll be able to get hold the money easily after your death.

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Funeral costs can also be paid directly from your estate upon death, but the bank will usually want to see both the death certificate and the bill from the funeral director before they’ll release any funds.