A funeral plan is a way of paying for a future funeral today. Here are some things to bear in mind if you’re thinking of taking one out.
Why use a funeral plan?
Funerals can be expensive, costing perhaps several thousand pounds, and many people worry that when they die, they won’t leave enough money for their funeral. With a funeral plan, you arrange and pay for it in advance.
You can arrange a funeral plan for your own funeral or for someone else’s, as long as the funeral will be held in the UK.
How do they work?
You pay either a lump sum or installments to the plan provider, or to a funeral director. Your money is either invested into a trust fund with trustees, or in an insurance policy, which is then used to pay for the funeral whenever that turns out to be. The aim of both methods is to safeguard your money until it’s needed, ensuring that it’s used to provide the funeral you have paid for.
How are funeral plans regulated?
Because plan providers use trust funds and insurance methods which are already regulated, they don’t need to be directly regulated themselves by the Financial Conduct Authority (FCA), the UK’s financial services regulator. This means that the money you pay into these funds is protected by compensation arrangements.
However, there are no FCA rules governing the detail of how providers do business with you. Instead, plan providers can register with the Funeral Planning Authority (FPA) if they agree to meet its rules and code of conduct. Registered providers will have to use the FPAs arrangements for resolving disputes between its registered providers and their customers.
Questions to ask the plan provider and your adviser
- Does the plan allow you to choose the funeral director?
- What if your chosen director goes out of business?
- What happens if the person the funeral is intended for dies abroad or away from home?
- Can the funeral director arrange a funeral of a different standard from the one you have chosen?
- Could there be any other expenses for the funeral, and what happens if there are?
- Is it possible to cancel the plan if circumstances change, for example if you’ve arranged for your spouse’s funeral but you later separate?
- Are there any cancellation charges?
- What if there are outstanding payments at death?
- If you pay by instalments, how long do you do this for and do you have to pay interest?
- What happens if there are outstanding instalments at death?
- What freedom do you have to change the details of your funeral plan?
If you take out a funeral plan then:
- Make sure you have a written record of the arrangements and keep it safe. You should receive a plan confirmation
- Make sure your next of kin knows you have already paid for your funeral and what the details are
- Check to see that the plan provider has a clear complaints procedure, and is a member of the Funeral Planning Authority, the industry’s professional body. Members must follow its standards when dealing with you and when considering any complaints
If you’re arranging a funeral, it’s important to understand that there are certain elements which you either have to pay for (or most people opt to pay for), and others which are optional. When making decisions about the optional costs, it’s essential you think about what you can afford.
Responsibility for the funeral
Usually a funeral is arranged by a close relative, such as the surviving spouse, a sibling or adult child, or by the deceased’s personal representatives. Alternatively it could be a friend or other relation supporting the family.
Taking the deceased’s wishes into account
Some people write in their wills what they want for their own funeral. You don’t normally have to follow these instructions, but the views of the deceased person as to the funeral arrangements and the disposal of their body must be taken into account. But if the deceased had taken out a pre-paid funeral plan, you will have to use the funeral directors covered by the plan and you may not get a refund for any parts of the package you don’t use.
- Check the will for the deceased’s personal wishes
- Check whether the deceased had a pre-paid funeral plan
Options for arranging a funeral
Funeral costs can significantly vary. So whilst you may find it difficult at this time, it’s important to shop around and compare quotes.
Most people use a funeral director to arrange a funeral. It can take away much of the administrative stress associated with planning a funeral and can give you the time you need to deal with your grief.
When looking for a funeral director, choose one from either:
- the National Association of Funeral Directors, or
- the Society of Allied and Independent Funeral Directors.
Funeral directors from these associations operate under a code of practice and have an established complaints procedure.
Before visiting a funeral director, see the table of costs below for an understanding of the costs typically associated with most funerals as well as the non-essential items.
Cut your bills by shopping around for funeral directors with lower prices
Over the last 10 years funeral costs have risen steadily and are still increasing, at a rate higher than inflation.
With low interest rates, any money invested in savings accounts may not grow sufficiently to cover the cots of a funeral when the time comes.
The average cost of a funeral has almost doubled over the last 10 years and is projected to rise to £5,540 by 2019*
*(source Mintel. The average cost of a funeral has risen from £1,920 in 2004 to £2,733 in 2009 – an increase of 7.32% per year. If costs contrinue to rise at this rate a funeral would increase to £5,540 in 2019)
Typical costs of a funeral:
|Item||Ways you could try to reduce the bill|
|Use of the chapel of rest for viewing the deceased||You don’t have to make the body available for viewing.|
|Hygienic treatment of the body (known as ‘embalming’)||If the body is to be viewed then it may be embalmed to preserve the deceased’s appearance. But it is not compulsory.|
|Administration – making all necessary arrangements and documentation||If you feel confident you could do this yourself or ask friends and family to help.|
|Coffin||You could request a lower priced coffin or opt for a shroud instead.|
|Hearse and limousine||You could ask for a more basic car or make arrangements to collect the body yourself.|
|Staff for the funeral itself||You could ask friends and family to help instead.|
|Item||Average cost||Ways you could try to reduce the bill|
|Doctor’s fees for death certification||£165||This fee only applies to a cremation, not for a burial. It also won’t apply if the deceased is in the hands of the coroner or a procurator fiscal in Scotland.|
|Cremation fees||£560||If the fee includes additional services such as an organist, you could ask for these to be removed.|
|Burial fees||£1,500||If the fee includes additional services such as an organist, you could ask for these to be removed.|
|Minister fees, religious or secular officiant or celebrant – in other words the person who performs the funeral service||£100+||You could ask a close friend or relative to perform the service.|
Non-essential costs typically associated with a funeral:
There are a number of additional services which you can add to a funeral. On average these can add another £2,000 to the bill.
Remember, these aren’t essential costs. But if you do want to include these as part of the service, whether you arrange the funeral yourself or use a funeral director, it’s important to shop around as costs can significantly vary. You could even make some of the arrangements yourself.
|Item||Average cost||Ways you could try to reduce the bill|
|Funeral flowers||£140||These days many people opt for having a charity collection instead. Or if you do want flowers, you could opt for homemade arrangements.|
|Death notice announcing a death or an obituary||£55||You could ask close friends and family to help out by calling others on your behalf or with posting or emailing homemade death notices.|
|Funeral notice announcing the time and location of a funeral in a local newspaper||£55||You could ask close friends and family to help out with phone calls or by posting or emailing homemade funeral notices.|
|Additional limousine||£260||You could just ask friends and family to let you use their cars instead.|
|Order sheets||£70||You could make these at home and personalise them.|
|Catering for a wake/funeral reception||£320||You could ask friends and family to chip in and bring something each or help you make the food at home.|
|Venue hire for a wake/funeral reception||£170||You could use your home or the home of willing family or friends.|
|Memorial||£800||These days many people opt to create an online memorial website instead, often with a link to a charity organisation supported by the deceased. This can be a much cheaper alternative.|
A Guaranteed Funeral Plan offers you a simple way to cover the cost of a cremation or burial in advance and once it’s paid for, it’s paid for.
Not only does it protect your loved ones from having to pay for your funeral, it also brings real savings because the cost of the funeral will be fixed at today’s prices.