#1 : Don’t Delay

They say the only sure things in life are death and taxes; we’d say inflation is too. Try and name one thing that you can buy today for less than you bought it for 10 years ago – it’s a struggle to think of anything. Funerals are no different, the cost of a funeral has increased an average of 6% each year in the last 10 years so buying a funeral plan sooner rather than later locks in the cost at today’s prices and means you avoid inflation no matter how long you live.

#2 : Don’t buy on price alone

Funeral plan providers come in all shapes and sizes but the plans they sell all look similar at first glance.   But don’t be fooled. Pretty much all funeral plans will cover the costs of the funeral director but many don’t guarantee to cover other “third party” costs (often called disbursements by funeral directors), like the cost of cremation or burial itself. Instead they provide an allowance that grows at a particular rate usually with the general rate of inflation. In some instances these allowance don’t even cover the average third party costs at today’s prices so are likely to fall well short in years to come leaving your family needing to find extra cash. Even those plans that start with a reasonable level of allowance based on today’s prices may well fall short if the third party costs rise quicker than general inflation – as they have done now for many years.

So, if you can afford to, it makes sense to choose a plan that guarantees that it will cover third party costs. It may cost a little extra now but at least you know that you family won’t be left facing any extra costs – Dignity Funeral Plans and Co-op Funeral Plans guarantee to cover third party costs.

#3 : Make sure it is affordable

Funeral plans typically cost between £3,000 – £4,000. Funeral plan providers offer a number of different ways to pay for their funeral plans. One lump sum, installments over periods from 12 months to 30 years and via a life insurance policy. If you are in good health and have the money saved then we would always recommend paying as a lump sum, with funeral inflation running above the level of interest it makes sense to do this.

If you don’t have the lump sum or have a chunk of it saved then paying by instalments might be an option. Remember that many funeral plan providers will charge you an administration fee – the equivalent of an interest charge – if you want to pay by installments over a period of more than 12 months. Most don’t charge you anything extra to pay over 12 months or less. Some of these administration charges can be quite high so make sure you know what you are being charged before making your choice.

The key thing to remember is that the funeral plan is only paid for once you’ve finished paying the installments – if you were to die part way through your installments period your family would need to pay the remainder of your installments in order to have your funeral. Bear this in mind, particularly if you decide to pay installments over a long period of time. The only advantage of paying by installments over simply saving the money up in savings account is that you lock in the cost of your funeral at today’s prices.

If you decide that the installments options are not affordable then you could choose to pay using a life insurance plan. This can be a good option if you are in poor health and you expect to live at least two years, as once you have lived for two years your funeral cost will be covered by the proceeds of the life insurance plan. The downside of these plans is that depending on how long you live you could end up paying in more than the cost of the funeral plans – so if living to a ripe old age runs in your family then this payment options may not be for you.

#4 : Use a reputable funeral plan provider

Interestingly unlike many other financial products such as life insurance Funeral Plans are not regulated by the governments Financial Conduct Authority. Instead the industry is self regulated through a body known as the Funeral Planning Authority (‘FPA’). The FPA sets out some ground rules, such as :

  • The requirement for funeral plan providers to maintain high standards of professional conduct;
  • that the money consumers pay into a funeral plan is safeguarded;
  • that registered funeral plan provides co-operate to delivery the FPA’s pledge to customers that in the unlikely event an FPA registered funeral plan provider becomes insolvent that the other members of the FPA will work together to assist in the delivery of the funerals of that insolvent funeral provider.

Whilst none of the above provides any guarantees we would recommend that you only use a funeral provider that is FPA registered and stick with the big well known brands like Co-op, Dignity and Golden Charter.

 #5 : Shop around and take advice

As with anything these days make sure you compare the different funeral plan providers and their various plans. There are lots of intermediaries that are selling funeral plans out there so make sure that you pick one that is independent of any one funeral provider so they can advise you on the best funeral plan for your needs.

At findafuneralplan.co.uk we offer free independent advice and comparison service to help you find the perfect funeral plan for you.  If you want to learn more about prepaid funeral plans then take a look our simple to understand guide.