How safe are funeral plans?

Funeral plans can provide valuable peace of mind that your funeral costs will be covered when you die, but it’s important to understand your rights

A coin piggy-bank with "Funeral" written on it sitting on a pile of coin.

A funeral plan can provide valuable peace of mind that your funeral costs will be covered when you die, but it’s important to understand what your rights are if something goes wrong.

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Funeral plans have soared in popularity in recent years, as they allow you to pay for your funeral in advance at today’s prices. That means even if costs rise in future, there won’t be anything extra for your loved ones to pay.

However, this type of plan shouldn’t be entered into lightly, and it’s important to understand where you stand if something goes wrong.

Here’s what you need to know.

What protection is there for people who buy funeral plans?

At the moment the Financial Conduct Authority (FCA), the city regulator, doesn’t regulate funeral plans, and these plans are not covered by the Financial Services Compensation Scheme (FSCS). However, the Treasury is currently considering bringing the market under the supervisions of the FCA to provide greater protection for consumers.

What happens if my funeral plan provider runs into financial difficulties?  

All funeral plan providers must ring-fence customers’ money and invest these funds so that they are available to pay for funerals when the time comes.

If you’ve taken out a funeral plan with a provider which belongs to the industry’s voluntary regulator the Funeral Planning Authority, you’ll have additional protection as the FPA will check that any payments are kept separately from the funeral plan provider, and that they’ve been invested properly.

Not all funeral plan providers are registered with the FPA, so if you’re considering buying this type of plan, check that the provider you’re dealing with is a member.

Are there any other ways to protect myself? 

Yes, paying for your funeral plan using a credit card can also provide you with protection.

That’s because under Section 75 of the Consumer Credit Act, if you’ve used your card to pay for something costing more than £100, the card provider is jointly liable with the retailer if something goes wrong.

So, if the funeral provider doesn’t provide what you paid for, or the company fails, the credit card provider is equally responsible for ensuring you’re not left out of pocket.

What else should I check?

Before buying any funeral plan, it’s really important to read the small print carefully so you understand exactly what is and isn’t covered.

Most plans will usually cover the cost of a cremation funeral, but there may be extras which aren’t included such as obituaries or flowers.

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Make sure you know where you stand if you need to cancel your policy too. You’ll usually have an initial cooling off period when you take out a plan. If you decide to cancel your plan after this period, you’ll usually have to pay a cancellation fee.