How to choose a pre-paid funeral plan
There are different costs and styles available, so you will usually be able to find a plan that suits your needs and your budget. Make sure you find out about the full range of options from different providers to ensure you get the best possible price. Many providers offer a range of plans at different costs.
There is a lot of information to take in, so ask for written information so you can compare the various options.
It is a good idea to discuss taking out a plan with your family. They may find it difficult at first, but usually they will come to appreciate your thoughtfulness and be grateful to know what you would want to be done. They may also like to contribute with their own ideas.
Make sure you take enough time to decide which plan is right for you. If you are not sure, you should seek advice from an independent financial adviser. Pre-paid funeral plans are not regulated by the Financial Services Authority but by the Funeral Planning Authority. Do make sure any plan you consider is registered with them so you know it abides by their Code of Practice.
There are many things to consider when choosing your plan, and some of these issues are listed below.
If you choose to pay in instalments
- It is important to be clear about how long you will need to pay instalments for and whether you have to pay interest on the unpaid balance.
- Make sure you keep a track of how many instalments you have paid and when you need to stop paying.
- If you die before all the instalments have been paid, your relatives will need to pay the outstanding amount. You should check with the company to see what the arrangements are in these circumstances.
What is included in the plan?
Are disbursements included? Disbursements are the costs payable to third parties such as fees for the minister, church or crematorium. Some plans include these costs as standard, others will pay a contribution towards them, and some exclude disbursements as these costs are beyond the control of the funeral director, so whoever is arranging your funeral would need to pay for these at the time.
You should think about what type of arrangements you would like, and whether these are included. For example, the type of coffin, transport to the venue, pall bearers, a notice in the paper and flowers.
Is the money placed in trust so that it can only be used for the funeral or will it be paid into the estate? If the latter money that is intended just for the funeral might be taken into account for calculating liability for inheritance tax.
Choosing the right company
Whether you opt for a plan that is offered by a funeral director, a funeral plan company or an insurance company, there are several things to consider before buying your plan:
- What happens if your chosen provider goes out of business? The plan should specify what safeguards are in place, and if you will be transferred to another provider or whether the money will be paid back to you or your estate. It might be worth choosing a well-established company.
- How does the company invest the money? The plan will either invest in a trust fund or in an insurance policy. If the money is in trust, it is important to make sure that the trust deed states that the money is for funeral costs and that the trust is administered by trustees independent of the company.
- Is the company a member of a professional body? For example, if the company is a member of the Funeral Planning Authority there is a code of practice which means there will be measures in place to regulate the service and a clear complaints procedure.
Other areas to consider
Can you choose a funeral director or is this specified by the plan provider? If you would prefer to use a specific local funeral director, this may influence which plan you choose.
If you buy your plan through a local company, ask what would happen if you were to move to a different area and if there are any additional costs if you change your arrangements.
What would happen if you die away from home? Many plans will include transportation within a specified radius in the UK but charge additional mileage beyond that, and there may be different conditions or additional costs if you die in another country.
Would you be able to amend the details of the plan at a later date, or upgrade your plan? If you change your mind about the plan, check whether you would be able to get a refund, and if there any charges for cancelling the plan. Insurance policies will have a cooling off' period, but this may not be the case for other plans.
It is also important to check what would happen if your family are not aware of the plan and make alternative arrangements, as the funeral plan company may not be obliged to refund the money due under the plan.
Does the plan just cover the basics of the funeral such as the choice between burial and cremation and how many cars are to be provided as well as the type of coffin. Are you able to give a record of your funeral wishes as well? Find out more about advance funeral wishes.