Types of Funeral Plans to Buy or Avoid.
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.
Types of Funeral Plans to Consider.
Insurance Linked Plans – relatively low monthly costs.
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.
Guaranteed Funeral Plans
All guaranteed funeral plans are not equal – have a look at our page on them.
When the day comes:
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!