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Prepaid funerals: what you need to consider

Written by: Paloma Kubiak
As the cost of a funeral has soared in the last few years, you could consider a prepaid funeral plan to spread the cost during your lifetime rather than leave the bill to loved ones upon your death. Here’s what you need to know.

The average cost of a basic funeral now stands near the £4,000 mark and while we all want to give our loved ones a proper send-off, the spiraling price can add further stress to an already emotional time.

So could a prepaid funeral – where you plan and pay for it in advance – be an option to consider?

How do prepaid funerals work?

With prepaid funerals you either pay a lump sum or instalments, and last year there were 183,000 plans sold by the 22 Funeral Planning Authority (FPA) registered providers.

The FPA estimates this amounts to about £700m though, for some, the cost will be spread if they pay in instalments.

Funeral plans vary quite a bit with regards to what they do and don’t cover, so what appears to be ‘cheap’ might be the most basic of plans compared with one which seems ‘expensive’. However the difference could mean there are no additional costs for family members when the time comes.

There’s no real average cost, but if you’re considering purchasing a plan it’s best to shop around as it will give you a rough indication of how much your chosen funeral is likely to cost.

Wasn’t there an issue with prepaid funeral plans in the past?

The FPA says the stigma tended to be around over 50s plans, which provide a cash sum which is not necessarily related to the price of a funeral. Graeme McAusland, CEO of the FPA, says these are often mistaken for funeral plans but “they are very different”, as funeral plans pay for and eventually carry out the funeral itself.

McAusland says: “For funeral plans, the main criticism has been that the families have to pay extra at the time of the funeral. The FPA has worked with its registered providers to improve literature and make it much clearer, and any provider wishing to become registered must adhere to these standards.

“This means customers can have a much better understanding of what their chosen funeral plan covers and we hope it makes it easier for them to relate that information to their loved ones.” He adds the FPA now receives very little by way of complaints on this issue.

Top tips to consider when looking to buy a funeral plan

Below the FPA outlines five tips and things to consider when purchasing a funeral plan:

  • Choose a registered provider: Funeral plan providers registered with the Funeral Planning Authority must adhere to a rigorous set of rules and code of practice.
  • Shop around. Think rationally about what you want your funeral plan to include, and consider this when comparing the cost of one plan against each other. One might appear cheaper but that might be because it covers less of the various costs than another. All funeral plans are different and you should choose one that suits your wishes.
  • Discuss with friends and family. When you’re in the process of choosing a plan, talk to your relatives and friends about it and make sure they know what’s going to be included and the exact details of who you’re purchasing the plan from. Also make sure they know where you’re going to keep the paperwork. This makes things easier for them in future when it comes to carrying out your wishes, and also helps to avoid any unexpected costs.
  • Think about how you’d like to pay for the plan. There are options to either pay in a lump sum or instalments; choose the option which best suits your circumstances and be sure not to pay in cash as there is then no record of your purchase, making it much harder to trace.
  • Check the paperwork. Once you’ve chosen and paid for your funeral plan, make sure you thoroughly check the paperwork and that it matches what you’ve discussed with the provider. Also make sure you understand the terms of the plan, for example what happens if you move house. You will need to let your provider know if you do move, but there could also be additional cost implications with some plans.

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