Are Monthly Payment Funeral Plans a Good Idea?

Are Monthly Payment Funeral Plans a Good Idea? main image

Given the rising cost of funerals and the low interest rates on savings, there is little wonder that funeral plans, allowing you to save money by fixing funeral costs at today’s prices are a good idea; but what about monthly instalment funeral plans? With the additional fees incurred for spreading your funeral costs over a longer period, are monthly instalment funeral plans a good idea?

The answer is undoubtedly yes; but don’t just take my word for it. Read on and see for yourself.

Funeral Costs – The Facts

Although the latest SunLife Cost of Dying Report 2017 shows a slight dip in annual funeral inflation of 4.7% compared to the usual 6% seen in previous years, there is no getting away from the fact that funeral costs have been and continue to increase way above the rate of inflation; so relying on savings just may not be enough.

Funeral costs have doubled over the last 10 years, now averaging £4,078. What’s more if this trend continues, a funeral could cost more than £11,000 in just 20 years time; not a small sum of money for any family to find. So now more than ever it is imperative that we take time to think about how much our own funeral could cost and more importantly, who will foot the bill.

Monthly Instalment Funeral Plans – The Facts

When I say that a monthly instalment funeral plan is a good idea, I am not talking about all funeral plans on offer. In addition to reading the small print there are 3 things you should be aware of when choosing the right funeral plan:

  1. Whether they are labelled as interest charges or administration fees, the additional costs incurred for spreading your funeral plan over a longer period vary massively from company to company. In some cases you could be paying hundreds of pounds more over the term of the funeral plan so do shop around before choosing the best monthly instalment funeral plan that suits your needs.
  2. Secondly not all funeral plans offer the same guarantees. Most funeral plans only offer a contribution for the cremation and minister’s fees, which could mean there is more for your family to pay when the time comes. This is why we always recommend the Dignity Funeral Plan so you can be sure there will be no nasty surprises when the time comes.
  3. The final point but of paramount importance is always choose a company that is registered with and regulated by the Funeral Planning Authority, so you can be sure the plan provider complies with their strict Rules and Code of Practice and that your money is protected by their safeguards.  

Monthly Instalment Funeral Plan Fees vs Funeral Costs

With funeral costs rising at such a high rate year on year, fixing the cost of your funeral service at today’s prices could save your family hundreds if not thousands of pounds; but what about when you factor in the additional costs incurred with a monthly instalment funeral plan?

Well as mentioned, the additional fees for spreading your funeral plan payments over a longer period varies hugely by plan provider, but to give you an example of the savings that can be made, even when paying additional fees, take a look at the following table.

Quite simply it shows the monthly and overall cost of a standard Dignity funeral plan paid over 1, 3, 5, 10 and 15 years. The potential saving column shows just how much you would have saved after 15 years – basically the longer you live, the more you could save your family.

Standard (Amber)  Plan - no restrictions
No of Years  Deposit  Monthly Payment Total Amount Payable Potential Savings
1 Year None £282.91 £3,395 £5,305
3 Years None £102.76 £3,700 £5,000
5 Years None £65.30 £3,919 £4,781
10 Years None £37.50 £4,501 £4,199
15 Years None £28.50 £5,131 £3,569

For example, a plan over 10 years costs £37.50 a month; that’s £4,501 in total. A funeral is predicted to cost £8,700 in 15 years time which means you could have saved your family a massive £4,199.

And don't forgot if you don't put plans in place, someone in your family will need to pay for your funeral, which in 15 years time alone could cost them £8,700.

Based on the following funeral cost predictions, it’s easy to see that the right funeral plan could save your family thousands of pounds:

  • In 5 years time a funeral is predicted to cost £5,094
  • In 10 years time a funeral is predicted to cost £6,657
  • In 15 years time a funeral is predicted to cost £8,700
  • In 20 years time a funeral is predicted to cost £11,371
  • In 30 years time a funeral is predicted to cost £19,423

Who knows what the future will bring

So now you know that even when you incur additional fees by spreading costs over 5, 10 or perhaps 15 years, you are still potentially saving your family a lot of money. But what happens if you don’t complete all of the payments; what happens if the plan is required before the end of the instalment term you have agreed?

The main point here is to always ask your proposed plan provider this question as it may vary however in general, all the money you have paid into the funeral plan goes towards the cost of the funeral and the family would just pay the balance based on the pre agreed price.

This may not initially sound ideal as you are still potentially leaving your family with funeral costs however don’t forget:

  • They will have all of the money you have paid into the plan to help with these fees – if you hadn’t bought a funeral plan there would be no money there to help so they would have to pay for the complete bill
  • The funeral costs have been fixed at today’s prices, therefore you could still have saved them money by avoiding future funeral inflation

A brighter tomorrow

It’s important when choosing the best monthly instalment funeral plan that you stick to a budget you are comfortable with on an ongoing basis, however if your situation changes and you either come into some money or have extra cash available, it is worth understanding if you can pay more into your funeral plan to lower the overall cost.

For example the Dignity funeral plan gives you the flexibility to pay more into the plan or pay it off in full. They just recalculate the administration fee based on the time you are actually paying into the plan so your total cost will be reduced.

And don’t forget at the end of the day a funeral plan isn’t just about money; it’s also about making everything easier for the family. When the time comes, the funeral director is just one phone call away; ready to take care of everything and in doing so removing the financial but also the emotional worry from your family. 

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