Category Archives: inflation funeral plans

inflation funeral plans

Over 50s Plans: We hate to disagree but

This is what Martin Lewis says about Over 50s Plans and we really think they have entirely missed the problem from a consumers viewpoint:

Weigh up whether an over-50s’ plan is really worth it

Over-50s’ plans promise to pay a fixed lump sum on death, with no need for a medical, which you could then use to cover your funeral costs.

While these sound like an easy way to protect your loved ones, there’s a crucial term in the small print:

“Premiums are payable for life and you could pay more in than is paid out on death.”

Because the amount it pays out is fixed, if you live a long time you may end up paying more for the plan than you’d ever receive.

So if you’ve got a plan already, don’t just cancel. First, do some sums to see how good or bad these plans work out for you. For full details see our Over 50s’ Life Insurance guide.”

So what is the major problem with Over 50s Plans?

Easy, it is the fact that a very large percentage of them won’t pay out a penny.

Why? Because they only pay out on death if the policy is still active, so the ideal financial scenario for the insurer is that the client pays for many, many years, then gets a bit old or dotty and forgets what the policy is and cancels it. So the insurer gets to keep all the premiums and doesn’t have to pay out so much as a bean!

Many others will keep topping up their plans in an attempt to keep up with funeral plan price inflation – only to find that they can no longer afford the premiums.  Result: you guessed it: the insurer gets to keep all the premiums and doesn’t have to pay out so much as a bean!

I wonder if any of the providers would dare provide the statistics showing what percentage of plans actually pay out?

Footnote: Over 50s plans is a generic name for non-profit whole of life insurance, though the public and some providers use it in a different sense. In our opinion, every sale of a non-profit whole of life plan is likely to be a mis-sale, but as they are not regulated products, I don’t believe compensation is available! Anyway, most people don’t realise there is a problem until it is too late and they are already dead, and for relatives to do anything they would need first o find out about the policy, then prove it was mis-sold, then get a grant of probate and finally complain!!

Our main report on Over 50s Plans is here.

Funeral Plan WARNINGS – This is Where Things Go Wrong

Prepaid Funeral Plan Warnings.

We feel that many people are buying funeral plans which they expect to cover things which they never set out to do. So we have compiled a list of things you might expect to be covered, but might well not be.  It makes good reading while you are considering the right funeral plan company for you, and whether you need any extras.

This page is a little random, but well worth reading, so please do read on.

Courage in the face of Funeral Plan Competition.

We at The Prepaid Funeral Review are pleased to advise that one of the major funeral plan firms has decided to stop selling the cut-down plans we have long campaigned against.  Who really wants a plan where you have no choice over the time or place of the funeral?  We could never recommend them. If you have bought one we would suggest you contact the provider and see if they will upgrade you to a normal plan – typically £300 to £400 more.

Funeral Plan WARNING: during our regular prepaid funeral plan reviews this January, we discovered one firm whose prices appeared to have gone down quite considerably.  On the face of it, they had suddenly become a “best buy.” But when we looked really carefully, we realised that they had just dropped all contributions to third-party costs.  It was NOT clearly pointed out that the family would have to pay the crematorium, the doctors fees and the minister or celebrant! Those costs represent roughly one-third of the total bill, which would make this provider rather expensive.  Those folk who think that all plans are pretty much the same could be in for a shock!

Funeral Plan WARNING: watch out for Over 50s plans which are based on non-profit whole of life policies (most of them).  With most, miss a few payments and you lose every penny. You will also be asked to increase your payments regularly so as to keep up with funeral cost inflation, and with many of them, you will probably pay in more than you get back. Stick to proper pre-paid funeral plans if you possibly can.

Funeral Plan WARNING: Some people do buy plans which cover only the Funeral Directors fees, and none of the third party costs which typically make up 30 to 40% of the final cost of a funeral.  No problem with that at all, as long as both you and the family are aware of it. Covering most of the costs is way better than none!

Funeral Plan WARNING: The Beginning of the End for Cut Down Plans?

These plans are offered by most providers and folk who haven’t really understood the Terms and Conditions will sometimes leave behind shocked and upset mourners. PLEASE AVOID – tens of thousands are buying these plans without our professional advice: don’t joint them! The key is where and when the funeral takes place is taken totally out of the control of the family.  Worst case could be 50 miles away at 8.30 in the morning.

Worse still, the crematorium owners are finding increased demand for out of normal hours funeral, so they are putting up their prices!  Some crematoriums are already causing problems with their high cremation fees, which already exceed the total third-party costs allowed by some prepaid funeral plans. They are using their muscle to try to disrupt the market to their own advantage, and push their already considerable profit margins ever higher on the back of high prices to third parties.

Funeral Plan WARNING:  Direct Cremation plans are relatively inexpensive.  Just be sure that your family realise that you will be whisked away and they will have no chance to say goodbye with you there. At the moment, one plan does allow for family viewings (only) but at extra cost.

Funeral Plan WARNING: never buy a funeral plan unless you have read ALL of the Terms and Conditions and brochure.

What is usually NOT included in a funeral plan?

As independent advisers on prepaid funeral plans, we see the market becoming much more complicated. Fine if you understand it all, but not so good if you don’t. That is why you need to speak to us!

How to avoid funeral debt

The Independent says that three times as many people are using crowdfunding to pay for funerals compared with the previous year.  Asking friends and strangers to pay for your funeral costs is going to be pretty unpleasant for anyone.  In this particular case, the mother had died at the age of 49, so funeral planning had only just become something of significant, as the link to the story further down will tell you.

Can you plan ahead for the cost of a funeral?

There will be many families who will have severe difficulty finding the finances to put aside to pay for a funeral, though if the family are close-knit enough to work together, we do have a solution whereby money can be pooled to buy a plan to be used by the first member to go, and at least restrict the cost to today’s prices. Later on, a second plan can be added and replaced in time.

Is life insurance suitable for avoiding funeral debt?

That is a tricky one: the older you get, the more expensive insurance becomes.  And if your finances hit a rocky patch at any age, it is common for insurance premiums to be missed, and for the plan to be cancelled with no money back. For more on these, go here.

Is saving into a bank or building society account sensible?

NO – not when the interest you earn on a savings account is tiny compared with the increasing cost of funerals: the cost is rising much faster than general inflation.  And such funds are too easily spent on something else!

What is Crowdfunding for a funeral?

These days it is possible to put an appeal on (for example) GoFundeMe and hope that folk will chip in to help.  In some communities, if you are well known and liked, that might work.  But it would need wide publicity, and many undertakers insist that all or part of their bill is paid before the funeral can go ahead.  Worse, they may well charge extra for storing the body for longer than normal.

Whatever happens, it is extra worry and upset at a time when things need to be as simple, straightforward and preplanned as possible – and that really only leaves one solution – contact us on 0800 0588 240 for advice on choosing a prepaid funeral plan and how to get a good value plan which suits your wishes (and may well avoid lots of arguments, as you have made the decisions!)

To read the Independent article, go here.

Funeral Plan Concerns Grow (but it isn’t all bad)..

Funeral Plan Concerns Grow with the wider choice of plans…

Which Funeral Plan?

Funeral plan choices

Funeral plans are great – as long as you understand what you are buying!   None of the following plans are bad plans, they are just unsuitable for most people!  All of this shows why you need our independent advice and should not rely on a company sales pitch.  And you should never sign up without reading the small print. That is where the disadvantages of some funeral plans are hidden, and with the wide range of funeral plan choices, you need help…

Sadly many people don’t take the trouble to read the small print.  Here are some common issues that people miss when they buy a plan:

 

  • The plan isn’t a funeral plan at all, it is a life insurance which has no value if you stop paying it.
  • Some plans only cover the Funeral Directors fees with nothing towards the third party costs such as the crematorium.  That alone can be £995 if it is a Dignity one (as at August 2017). These costs are typically around a third of the total.  Again, no problem, and much better than nothing as long as the family know.  The allowances in prepaid plans range from £500 to around £1,200.  In most cases, that is linked to inflation.
  • You’ve bought a Direct Cremation plan, so you will be whisked away and cremated perhaps hundreds of miles away with no chance for the family to see you, or attend the service.  These are the plan of choice for some people, but do the people who would wish to attend the service know, or are they going to be shocked and upset?
  • There is a new breed of cut cut down plan which typically saves you £400 but could result in your funeral being anything up to 50 miles away at 9.30 in the morning.  Not wildly convenient for family and friends!  We think they are a marketing gimmick and very rarely best advice. Typically the saving is accomplished by giving you no influence over choice of undertaker or the location of the cremation.  These plans are usually only for cremation.
  • Burial Plans – in our experience – NEVER include the cost of the burial plot, and not all family plots are able to accept further family members.  Burial plots can vary from a  few hundred pounds to many, many thousands.
  • Please do not treat a funeral plan as if it was a savings plan.

Many of the plans we advise on are very flexible, and you can change the plan by adding limousines, or changing from a direct cremation plan to a standard plan – as long as it is done in time.

For a more detailed look at the types of funeral plans available, have a look at this article.  But if you just want straightforward advice, give us a call or use the form to the right.

Problems With Funeral Prices: Have MPs Been Fooled?

Problems With Funeral Prices – Why The Market Isn’t Working.

Problems With Funeral Prices

Cost of Funerals

It isn’t what some MPs think that is causing the problem. James Dunn, founder at Funeralbooker says: “Co-op Funeralcare’s sales figures (2016 ones, just released) show a widening gap in funeral costs quoted by independents and the largest chain in the UK; with the Co-op as much as 42% more expensive. There needs to be far greater transparency and online availability of the costs associated with funerals and what people should typically expect to pay. At the same time, it’s also vital that bereaved families feel supported and able to explore all their options so that they can choose the type of funeral that best suits their budget and their needs.“

The same authors research indicates that Dignity operate the most expensive crematoriums in the UK.   In fact, 17 out of the top 20 most expensive are operated by Dignity. They charge twice as much as the cheapest crematorium.

Dignity recently bought the Co-ops crematoriums, consolidating their position in the marketplace. I wonder what happened to prices?

MPs have been misled  as to the causes of Problems With Funeral Prices.

MPs have been misled into thinking that increasing sales of prepaid funeral plans are the reason for problems with funeral prices.   The truth is actually the opposite – funeral plan providers help keep prices down, which is why both Dignity (in particular) and the Co-op are increasingly taking tight control of the sales of their plans. One of the new providers is even providing training and support to increase the number of independent funeral directors in an effort to keep funeral costs escalation under control.

In point of fact, regulatory and environmental pressures are a major cause of funeral price inflation.  But Dignity’s crematoriums have a virtual monopoly in most of the areas they are in.  So funeral directors pay their prices or tell families the funeral has to be held maybe 30+ miles away where the nearest non-Dignity crematorium is.  And it might be further.

Cremation facilities are seriously expensive to set up from scratch, so it is hard for anyone to set up in competition. We are pleased to see that some are managing it though.  The harder Dignity push their prices up, the easier it will be for others to compete, but it will never be easy. Perhaps the Competition and Markets Authority should look it Dignity’s crematoriums. In effect, they are local monopolies and should be price controlled.

There is a grave (sorry!) danger of the Co-op and Dignity – who are already working closely together – will use their position in the market to push prices up further. Dignity are growing their profits handsomely – at the expense of grieving families. And they do it by hiding behind the names of the family firms they have bought out so that they look independent.

We are proud of our support of genuine independent funeral directors who tend to offer a better service at a lower cost. We intend to continue to promote the services of independent funeral directors, and the prepaid plans which help to ensure the survival of competition in the market, which is under threat.