We all think about how our funeral will end up being paid for, so here are some options for you to consider:
1) Keep cash in the bank to pay for the funeral.
Over the last 5 years, your original £2000 might have grown to £2,308.59 if it some emergency hasn’t caused it to be spent, and it hasn’t gone on Care Fees. There are other issues too
I can’t thank The Prepaid Funeral Review team enough. They asked me what I wanted and then sent me the details of companies that could offer just what I was looking for. A thoroughly professional, friendly and stress-free experience, and they hold your hand every step of the way. No question is too silly or small. They really do understand and take the time to help.
Your £2000 plan taken out 5 years ago would still pay out £2000, or nothing at all if you miss a couple of payments. Non-profit whole of life is the technical name, and it is usually only the insurance company that makes the profit, so as far as your family is concerned it will probably be no profit and no interest on many years “savings”!
3) A funeral costing £2000 then would already cost :
According to Sun Life, costs have risen by 36.53% in just 5 years – and it gets worse. They have risen from £1,230 in 1997 to nearly £4000 today (2017). Conservative estimates suggest that by 2024 a funeral will cost, on average, between £7,000 and £8000.
4) Take out a Prepaid Funeral Plan.
At least that way the major burden of costs will be taken care of.
Not everyone can afford to pay for the whole lot in one go, so there are all sorts of different ways of easing the inevitable problems. Different providers offer their own options, so a chat with us may mean you discover options you had no idea existed. Or you can invite all their salesmen round to sell to you! At least ask us for a Free copy of our Final Wishes booklet so you can leave some guidance behind even if there is no money for a plan.
So what to do next…
It makes sense to minimise the financial and emotional strain on those left behind. The majority of prepaid funeral plans are paid for in one go, but monthly instalment terms are available too, so most people can afford one.
Just give us a call on 0800 0588 240, or use the enquiry form if it is out of office hours (we have lives!), and we will be pleased to discuss the issues with you, give you any advice and guidance we can, and send you written recommendations (if you wish.)
Not everyone can afford to pay for a funeral plan in one go, so most plans offer some sort of monthly payment plan. You can, of course, go for the Over 50s style insurance which we dislike intensely. But proper prepaid funeral can also be paid for on a monthly basis. With most prepaid funeral plans, monthly contributions only go on for a maximum of 10 years – then the plan is fully paid. Even if you miss installments you rarely lose everything unless it is very early on. Contrast that with monthly premiums for Over 50s Plans which typically have to be paid until you are 85 or 90 and where you do lose every penny if you miss payments.
Ideally, you should be able to put down some money as a deposit, to reduce the monthly cost, but not all providers insist on one. So what are the normal offers available?
Low cost monthly funeral plans.
Most plans can be paid in monthly instalments.
The cheapest type is the Direct Cremation Plan. They are not really ideal, but some of them will allow you to upgrade them to a more normal plan allowing for a service later on. That option allows for dramatically lower monthly payments. But we need to make sure that you have a plan which can be upgraded. In some cases upgrades can be done at almost the last minute.
The next lowest in monthly cost is the group of plans which pay only the funeral directors fees. The crematorium or burial costs have to be found elsewhere, as do ministers and doctors fees. But again, the plans can be upgraded later. These can be used as a way of topping up one of the Over 50s life plans as they lose out to inflation – if you already have one.
Moving up slightly are the new breed of cut down plans. They are typically only perhaps £5 a month cheaper, but they seriously restrict where and when the funeral is held. But if that fiver is more than you can stretch too, many can be topped up to the normal full plans below.
The we get to standard funeral plans which cover the basics. Typically, the funeral director is paid in full. A substantial allowance is put aside (and inflation linked) to cover crematorium fees, ministers or celebrants fees and the doctors fees. You can allow for limousines for the family and all sorts of fancy things if you wish. But we believe that the main thing is to cover the basics as far as you are able, and keep the monthly payments at a reasonable level!
We’re happy to chat through the options, without obligation, so why not give us a call!
A funeral insurance policy often doesn’t do what it says (or rather, implies) on the advertising. Advertising for this type of senior insurance policy has changed a lot over the last few years, so it now says that it will contribute towards the cost of your funeral. In real terms, most will contribute much less than you might expect. We understand that over half a million people a year buy from funeral insurance companies, and as you might expect, some are better than others.
Advantages of Funeral Insurance Plans.
You can put aside a lower amount than you could for an proper prepaid funeral plan (though of course the benefits will be much lower too.)
No medical is required, the same as for a prepaid plan, but the insurance plan will pay out in full after an initial period, often 2 years. So if you die in the first few years, a monthly paid life insurance can be better value than a monthly prepaid funeral plan. So if you are in very poor health and pretty sure to die in over 2 years and under (say) 6 years, this sort of plan could be a bargain.
Disadvantages of Funeral Life Insurance.
There is generally only accidental death cover in the “moratorium” period, typically 2 years. If you should die from natural causes or by your own hand, some companies would pay back what you had paid in plus some interest.
In most cases (unless you keep increasing premiums) the buying power of the death benefit will shrink in line with funeral cost inflation. Over the last 5 years that would have reduced the real value of a £3,000 insurance to a little over £2,000 – a big drop which will only get bigger over time.
Nearly all funeral insurances are “non profit whole of life” – policies which are not regulated by the Financial Conduct Authority. They have NO CASH VALUE at any time. This means that if you miss a few premiums because you are ill, then you die, your policy will not pay out a penny. The longer you have paid in, the more you will lose. Prepaid plans are the other way round.
Insurance premiums will typically have to be paid until you reach 85 or 90, so the longer you last, the worse value they provide. Prepaid plans are normally paid off within 10 years, so whilst the initial monthly cost may be higher, the long term value is much better.
With an insurance plan, you may well end up paying in more than your family get out towards your funeral. Some companies “generously” say they will, if the policy is still running when you die, pay out all of your premiums as a death benefit. In effect, you have made an interest free loan to them for perhaps 30 years.
Our Conclusion On Funeral Insurance.
Most people are guaranteed to lose out on these plans, and would be better off with even a very basic prepaid plan.
But there is a small group of people who could benefit. They are people with terminal illnesses which are unlikely to result in death before 2 years are up, but are unlikely to survive for more that 6 to 8 years. If you are unfortunate enough to be in the category, why not go for it? Your family need to understand that early death will result in no significant benefit, but if you last through the moratorium (premiums back only) period, and don’t live for an inconveniently long time, then funeral insurance could be a bargain.
Give us a ring and we will chat the options through without obligation.
There are many types of funeral plans. The trouble is many are not actually designed to pay for funerals. We understand more plans are sold which are not designed to pay for funerals than ones which are. Why on earth would anyone buy such a plan? Clever marketing and lack of understanding. Read our article about them!
Types of funeral plan adviser and website.
Nearly all funeral plan advisers and websites are set up to sell one companies products. So everyone else is either ignored or show in an unfavourable light. The Research Team at the Prepaid Funeral Review are independent experts, and we review as many plans as we can get our hands on. Bear in mind that several of the leading providers let big sellers “white label” their plans. That means same plan, different name and brochure and maybe a slight change in price. But back to types of funeral plans. We’ll start off with plans to avoid (for most people.)
Types of Funeral Plan to Avoid.
There is a type of life insurance called “non-profit whole of life” which is unregulated and in our opinion should be banned. It forms the basis of many so called “Over 50s” plans often promoted by famous personalities. What most of them offer:
A fixed death benefit after (typically) the first 2 years.
No medical questions (there are none for proper funeral plans either.)
No cash value at any time. So if you miss a couple of premiums before you die, you lose every penny.
Crucially, no inflation proofing, so after 12 years the plan you take out to cover the cost of a funeral today might cover half of the cost. And that is if funeral cost inflation reduces to 6%.
They are such bad value that some have now introduced a guarantee that they will return your payments in full when you die! Provided of course you haven’t lost everything by missing payments.
There are one or two of this type of plan which are genuinely set up to pay for a funeral, and the benefits to some extent linked with those costs. These are not our favourites, but they do have a real place in the market which we are not going to go into here. You still have the problem that payments must be kept up, but you are buying specific funeral services, so inflation is less of an issue.
These are essentially funeral plans with no family attendance or service. Most offer no possibility to view the deceased after they have been collected by the undertaker, typically in funeral ambulance. We are concerned that some family and friends will be shocked that they don’t get a conventional chance to say goodbye.
That said, they are the cheapest way to get a proper funeral plan and some providers will let you upgrade at any time up to the point where the undertaker is called out.
Funeral Directors Fees ONLY Plans.
This is where things start to get dangerous for those who don’t really understand what they are buying, or don’t make it clear to family. Roughly two thirds of a standard funeral is covered by this sort of plan. They do NOT cover “disbursements” or third party costs (in English). So the family will have to pay for the crematorium and service, for the doctors fees where relevant and for the minister or celebrant. At the moment, £1100 would be affair average for that, but costs are increasing all the time. Many Dignity owned crematoria charge £999 just for a basic cremation alone in early 2017, on top of the funeral directors fees etc! The average is around 30% lower.
Types of Funeral Plans: Cut Down Plans.
In an effort to sell cheap plans, most funeral plan companies now have these. Again, they are fine if you and the family understand them. They save money by using out of hours times at crematoriums which might be as much as 50 miles away. So relatives just could have to travel 50 miles through rush hour traffic to get to a 9.30 am cremation. Far from ideal, especially as the savings are not vast. These plans are only available for cremations.
Types of Funeral Plans: Standard Funeral Plans.
They typically cover the funeral directors costs, and make an index linked allowance towards the third party costs. So you have money towards cremation and a service and doctors fees, which in most cases should be enough. If there is a shortfall, then the family will need to pay the extra, but it should be relatively modest. These are our favourite sort of plans as they are not too expensive. They cover the basics so no one is going to have to find lots of cash when you die.
Like the following plans, these can be used for burials. In those circumstances, the third party allowance goes towards the cost of digging and refilling the grave. The cost of a burial plot is not included, they have to be purchased separately. Church services will nearly always cost more.
Mid Range Funeral Plans.
Usually the same as the standard ones, with a limousine for the family added. Some will add extra bearers or a slightly posher coffin.
Top of the Range Plans
Most add a further limousine, a posher coffin and maybe a spray of flowers and a few other fairly minor items. But you can add pretty much whatever you like.
When the day for dealing with the undertaker does arrive, your family can avoid being guilt- tripped into spending potentially vast amounts of money on extras which you would have hated them to waste money on!
So what is a cut down cut price funeral plan? Should you consider them? We think there is scope for misselling here. The plans are complicated, and few people read the small print. We do, to protect our clients.
The funeral plan market is very competitive and the public are always keen to find a cut price bargain funeral plan. That is great, as long as you understand just how the plan has been set up to keep its’ price low.
These types of plans are always cremation only plans.
So how are they cut down to be cut price funeral plans?
Cremation prices vary substantially depending on the time of day. Typically, the cost will be lower for a funeral starting after 4 pm, or finishing before 10 am. Why? Because those time slots are less convenient for family and friends and the traffic is often worse. So the cut price funeral plans
Crematoriums also vary widely in what they charge. So if the cut price funeral plan provider can choose the crematorium, chances are they can pay a lot less. The disadvantage is that they might choose a crematorium 4o to 50 miles away. Couple that with the early or late time for the service, and you can begin to see why these plans won’t suit everyone.
Funeral Directors costs vary widely too, and with cut price funeral plans, you don’t get to chose the undertaker. The prepaid funeral plan company will choose them. You won’t get a bad one, that isn’t an issue. But they may not be local and could be based as much as 30 miles away.
So if you have someone selling you cut price funeral plans, make sure they go slowly through the terms and conditions before you sign up. And if you do buy a cut down funeral plan, please make sure your family are aware of it. We are NOT fans in general. The savings are not enough for the potential problems.