What is a prepaid funeral Plan?

A prepaid funeral plan is a secure way to arrange and pay for your funeral in advance, leaving your family free from the financial pressure of soaring funeral costs as well as the stress and worry of having to make all of the funeral arrangements when the time comes.

Instead, they just make one phone call and the funeral director will take care of everything as detailed in the pre-paid plan; giving them much needed time and breathing space to come to terms with the upset and the loss.

What’s more, when you buy a prepaid funeral plan you are fixing your costs at today’s prices, therefore avoiding future inflation. So in addition to helping protect your family emotionally, buying a pre-paid funeral plan could also be a sound investment.

How do funeral plans work?

A funeral plan works by letting you pay in advance for your funeral. You simply choose the level of service required and preferred method of payment based on your needs and budget. The money is then held securely either in a trust fund or life insurance policy until required.

You have the flexibility to pay for your plan in full with a single payment or by instalments over a number of years. You do pay more for spreading your costs over a longer period however most funeral plan providers give you the option to pay over 12 months without facing additional fees. 

Once your plan is in place and you have completed your payments, there will be nothing more to pay for the services that are guaranteed in the plan, no matter when it is in the future or how much prices have risen.

What is included in a funeral plan?

Most plan providers offer three or four levels of service. The cover in each is comprised of two elements;

  • The funeral directors services
  • Third party fees – otherwise known as disbursements

The funeral directors services included will depend on the level of service you choose but typically include:

  • Collection and care of the deceased
  • The funeral directors help and guidance with all the documentation
  • Their services on the day
  • The use of the chapel of rest
  • A coffin
  • The hearse
  • Limousine(s) for the family

The third party fees are the essential charges that are beyond the control of the funeral director, namely the:

  • Cremation or Burial fees
  • The minister or officiant’s fees for conducting the service
  • Doctors charges if a second death certificate is required*

All funeral plans include a full guarantee for the funeral directors services listed however the majority of providers only include an allowance towards the cremation and minister’s fees.

With these types of ‘contribution’ style plan, your family could face a shortfall and as a result have more to pay when the time comes. Therefore when choosing a plan, it is important to look at what is and most importantly what isn’t guaranteed.

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how does a funeral plan work

What are the benefits of a funeral plan?

Choosing to put plans in place in advance with a prepaid funeral plan comes with a number of benefits for both you and your family:

  • Save money – by fixing costs at today’s prices and guaranteeing your funeral services, therefore avoiding future inflation.
  • Pay the right price – by only choosing the services you want. Most families are reluctant to shop around at the time of need as it is just too upsetting or they feel it is in some way disrespectful to the person that has died. By putting plans in place you can shop around and pay the price you want to pay.
  • Protect your family – from the stress and worry of arranging and paying for your funeral when the time comes. Instead of having to make difficult decisions on the type of service you would have wanted or the coffin, your family will make one phone call to the funeral director and they will take care of everything as detailed in your pre-paid plan.
  • Say good bye your way – by choosing the type of funeral service you want and making it more personal by adding special wishes such as your favourite music, hymns, readings or poems.  
  • Your money is protected – if you choose a company that is registered and therefore regulated by the Funeral Planning Authority which has strict rules and safeguards in place as to how your money is held.
  • You have the flexibility to move – if you choose a funeral plan provider that offers national coverage with a large network of funeral directors. Do check that the company will transfer the plan at no extra charge though as some charge for this service.
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Who should I get a funeral plan with?

If you are thinking of pre-arranging your funeral, it is important to do your homework and take time to compare funeral plans as they do vary.

All prepaid funeral plans will guarantee to cover your funeral directors services but there will be some differences. For example some companies restrict transportation of the person who has died to a 25 mile radius, where as others only include use of the chapel of rest in their more comprehensive funeral plans.

In addition, many companies only include a contribution towards the cremation and minister’s fees which could leave your family with more to pay, where as others will include a full guarantee.

Take a look at our funeral plan comparison page for more information on what to look out for when comparing funeral plans and why we have chosen to recommend leading provider Dignity.

When is it a bad idea?

If you choose wisely then a funeral plan is not a bad idea; you just need to know what to look out for. At the end of the day you are putting plans in place for the future that will remove financial and emotional worry from your family which can only be a good thing.

Essentially there are two important points to keep in mind when choosing your plan, both of which are covered in detail in the information we provide:

  • Always ensure that your money is held securely
  • Understand how the plan works and what services are guaranteed

So a funeral plan is a good idea rather than a bad one - but only if you choose the right one for you.

How are funeral plans regulated?

When choosing a pre-paid funeral plan it is important to ensure the company is registered and regulated by the Funeral Planning Authority. Not all companies are so it is important to check. Registered members have to prove that they comply with their strict rules and code of practise as to how your money is held and the service you receive. What’s more they have to re-apply for membership on an annual basis which ensures consistency.

Funeral Plan providers who are not members of the Funeral Planning Authority have not had to prove they adhere to these safeguards – which is why we always recommend you choose an FPA member. 

Who are the Funeral Planning Authority?

The Funeral Planning Authority is a regulatory body that was set up by the industry in 2002 to oversee the correct management of funeral plans. It has a strict set of rules and code of practise that members must adhere to and a rigorous process companies need to go through in order to be accepted.

In general terms the Funeral Planning Authority are there to protect consumers by measuring and monitoring the following areas:

  • Conduct – Members must act in a courteous and professional manner at all times with no pressure sales or misleading information.
  • Marketing and Advertising – All material must be in good taste and accurate with no unsubstantiated claims about funeral plans in general or other providers.
  • Information – All literature must be accurate, clear and include full details of costs.
  • Contracts and Documents – Plan providers must provide customers with a contract including their full terms and conditions and membership certificate.
  • Plan Funds – The member must comply with the FPA’s rules as to how the money is kept securely; be happy to have the trust audited annually and ensure that it is managed independently.
  • Complaints and Disputes – all members must respond to complaints in writing within 7 days. If the complaint cannot be resolved the customer has the right to contact the FPA who will act as an independent conciliation service.
  • Pledge to Customers – if anything happens to one of the members, the other FPA providers will look into ways to provide the funeral services for that companies customers.   

Are there requirements to get one?

There is no requirement to buy a funeral plan but as an increasing number of families throughout the UK are facing financial hardship and debt as a result of rising funeral costs, putting plans in place is both a kind and worthwhile thing to do.

Unlike life insurance, when you buy a funeral plan you are paying in advance for a specific set of services, so there are very few restrictions as to whether you can apply.

Some funeral plan providers specify that you need to be 50 to apply however many offer services to anyone who is 18 or over.

The only other restriction with age is if you are choosing to pay by instalments as now an increasing number of plan providers state that you must have completed your payments by a certain age; usually 80 or 85.

You’re main residence needs to be in the UK however a couple of companies offer ‘dual certification’ plans which basically means they can be used in the UK or certain European countries such as Spain, Portugal, Cyprus and The Canaries.

Updated 18th March 2020
by Ashley Shepherd
Ashley Shepherd

Ashley is the founder and managing director at Over50choices. With over 30 years’ experience in financial services, he has held senior roles in building societies, banks and insurance companies.

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Do I need a medical?

As mentioned a prepaid funeral plan is not an insurance plan, so the state of your health is not taken into account; therefore you do not need to have a medical or answer any questions about the state of your health or lifestyle.

You are simply paying in advance for your funeral services, regardless of when that will be.

what is a funeral plan

What should I do now?

To find out more about how funeral plans compare, take a look at our comparison table for details of leading UK funeral plan providers.

You can also take a look at our expert independent reviews on individual companies.

Alternatively if you would like to request a brochure please click on the button.

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