A prepaid funeral plan is just that – your plan for the type of funeral you want when you die and for which you pay in advance. This gives you the twin benefits of:
- making your own decisions about the precisely what type of send-off you want, so relieving your grieving family members of some difficult choices at what is likely to be a difficult time; and
- payment for those services at today’s prices, rather than those likely to be in play when the time finally comes – a distinct advantage, given insurers’ Sun Life’s estimate that the average cost of a funeral in England and Wales is currently outstripping the rate of inflation some 16 to 1.
How do they work?
Funeral plans work in an essentially simple and straight forward way – you choose whether you want a fairly basic or more elaborate send-off, choose the funeral directors you want to conduct the arrangements and, pay the current price for the type of funeral you want.
Prepayment is generally made in a single lump sum, although may also be made over instalments lasting between a typically one to thirty years.
When the time comes, the amount you have paid is released to your designated firm of funeral directors to cover those costs.
Taking care of your prepayment
Many firms of funeral directors operate schemes where you are able to pay in advance for a future call on their services.
The problem arises, however, if the firm you chose happens to go out of business before the time comes – the advancement payment you made may be at risk and you find yourself paying an alternative firm all over again.
National providers of prepaid funeral plans – especially those registered with the industry’s self-regulatory body, the Funeral Planning Authority (FPA) – ensure the independent safe keeping of your funds by placing them in trust or by purchasing a whole of life insurance policy in your name. In either event, the provider ensures that the sum you agreed is guaranteed to be available when needed to pay for your funeral arrangements.
If the funeral directors you originally chose go out of business, your money is still safely available and may be used to pay an alternative firm for similar services.
Points to take into consideration
Depending on the funeral plan you choose and the nature of the ceremony you propose, you may prepay either part or the whole of the cost of the proposed arrangements.
Bear in mind, however, that plans typically cover the funeral directors’ costs only and that you may still need to make separate payment for things such as a burial plot, the floral tributes and any reception or wake you are planning.
Which? magazine points out that you may enjoy protection of your advancement payment over and above any provided under the FPA’s code of conduct thanks to Section 75 of the Consumer Credit Act, as amended. This provides useful consumer protection if you have used your credit card to pay for all or part of a prepaid funeral plan using your credit card.