Our expert researcher answers your questions on prepaid funeral plans. Feel free to send in your questions using the form to the right. If you find us helpful, we always appreciate a brief comment here.
FAQ: “Is My Money SAFE in Prepaid Funeral Plan?”
“If you make your payment direct to the funeral plan company, and not to a third party, then all should be well PROVIDED that the provider is UK based and consequently subject to UK Regulations of one sort or another.” Not all providers are based in the UK, so regulation and security may be lower. Planholders money is protected in one of two ways for UK companies:
- A separately managed trust fund, with independent trustees, independent accountants and investment management. Most importantly, a three-yearly review by an actuary to ensure the fund is adequate to pay all claims for funerals to take place. I would remind you that third party costs are generally index linked rather than guaranteed. Alternatively:
- A highly regulated insurance company manages the funds with exactly the same intentions of protecting, growing and ensuring that adequate funds are available.
All that said, some companies are much more generous to their shareholders than clients.” Which leads on to:
FAQ: What happens if the funeral plan company goes out of business?
“Generally speaking, clients are unlikely to have any significant problems as their funds should be ring-fenced from those of the company as in the answer above. All that will happen is that the Trustees will look at the situation and appoint a new company to manage the assets for your benefit. Most likely, one of the large funeral directors companies will buy the future benefits of all those funerals, and the overall fund will continue to be managed in the same way, but perhaps with new undertakers.”
FAQ: “Is it safe to buy over the phone?”
“We believe it is unwise to make any payments over the phone. Always pay by cheque made out to the Funeral Plan Provider or by credit card. Or pay through your online bank account and make certain that the correct name appears as the payee, assuming your bank has that additional security check.
NEVER make a decision until you have had the chance to read the FULL details – both the Brochure and crucially the terms of business where the real truth is often buried. You can’t read the small print until you have it, and that is vital before making a decision. This may be harsh, but there are too many ways of taking advantage!”
Funeral Plan Question: “Should I only deal with Funeral Planning Authority regulated companies?”,
“We believe that FPA Regulation is certainly a useful guide, but just because a company is not a member, that doesn’t make it a bad company. The FPA are a good regulator, but regulation is due to be taken over by the Financial Conduct Authority which is likely to result in some better sales tactics, but vastly reduced choice and innovation, plus significantly higher prices to allow staff to be taken on to deal with the FCA and its vast army of jobsworths and empire builders (not a fan!)
FAQ: What does a funeral plan cover? NOT everything!
“They are all different. There are two parts to most plans, and even a plan with only one part is still sold as a funeral plan:
- The basic building block of any funeral plan is the funeral directors services. On average, these currently account for around 60% of the cost of cremation: burials are more complicated to cost, see below. Many people mistakenly buy a cheap plan, which covers only the funeral directors fees. That is usually guaranteed.
- But what people forget is amount and guarantees on third-party costs, which won’t all be covered. What is the amount allowed for other costs such as the crematorium, doctors and ministers fees, a service included? It is all very well a brochure saying that there is an allowance for these, but how much is it, does it increase (queue lies from som salespeople) and how? Are any third party costs guaranteed? In some areas, the third party costs would be more than eaten up just by crematorium fees giving rise to an immediate request for a top-up to the relatives. Some plans have NO allowance, some have specific items which are fully guaranteed. Another offers a low £1,000 allowance which MAY be increased if they feel like it. Hardly a cast iron indexation.
All of these are factors we take into account before making a recommendation, which is personal to you and posted out for you to read, without sales pressure.”
FAQ: What happens if I die before I finish paying for my funeral plan?
“With most plans, If you die before all instalments have been paid, your family will need to pay the rest of the balance, usually before the funeral can take place. However, some companies will pay for the funeral in full, provided a minimum number of payments have been made. There are some terms and conditions, and it is a point sometimes misrepresented by over-enthusiastic salespeople. So read the small print carefully – or get your advice from us!
Generally speaking, funeral plan costs are rising much faster than inflation, so it is much better to start a plan on instalments than it is to save up and pay in one go. ”
Funeral Plan Question: Can I change the Funeral Director?
“Not all funeral directors will accept all or indeed any plans. Why? Because they want to sell their own plan generally speaking, which may or may not be good or transferable. Most plans allocate a specific funeral director at the beginning, but they may be sold or you may move, so there will always be flexibility as things change. Funeral directors are regularly sold!
One point that we would make is that choosing a specific funeral director at the outset make our work harder, and there is a fair chance they won’t exist in the same format when you expire – family names often shelter conglomerate takeovers!”
FAQ Is life insurance better than a funeral plan?
A life insurance plan pays out a cash sum which has to be claimed by the family when you die. It can be used how you or your family wish. The sum paid out may be far too much or far too little depending on funeral cost inflation and the type of plan it is. Most will not pay out fast enough to be available to pay for the funeral, and they can take months.
A prepaid funeral plan lets you pre-arrange and pay for your funeral services in advance so your family won’t have the emotional or financial worry when the time comes.
Funeral Plan Questions: What about direct cremation plans?
“These are increasingly popular. A standard direct cremation means that a nice respectable ambulance-like vehicle (not a hearse) will collect the deceased and the family will have no further involvement unless they ask for the ashes to be returned. Not what everyone wants, but low cost and effective. Some will allow extras, some won’t and not all are fully guaranteed, so our expertise is still valuable – and free!”
Funeral Plan Questions: “I am thinking of buying an XYZ Funeral Plan – what do you think of them?”
“We are careful not to point out Best Buys on our site because there are too many factors to take into account, but we will happily advise you if we believe there is a more suitable plan than the one you are considering. But we would ask you to do this BEFORE you pay a deposit or sign on the dotted line. Use the form to the right or give us a call. All funeral plans are very much not all the same. You will get an honest answer.”
FAQ: “Can I get my money back if I change my mind?”,
“There is a cooling-off period with all the firms we are aware of, but it ranges from 7 days to 30 days, and if you are a day late, there will usually be a significant penalty, sometimes as much as 25% of the full cost of the plan. If you were paying on instalments you will probably find the penalty eats up what you have paid for some time. Don’t buy a plan if you are not sure you can afford it! But the unexpected happens, so always ring the company up to explain the situation and they may be able to help if they are a decent firm.”
Funeral Plan Questions: Do Funeral Plans Provide for Burial?
“Good question: yes and no is the answer. The key issue is whether the right person owns a burial plot already. Often they are in the wrong name and it can take months to transfer ownership, even if it is possible. Always check that additional burials are allowed, and within what timescale. Many burial plots are leasehold, which can be as short as 29 years. Plots can cost from £200 to £15,000 or more – and then you have to pay a sometimes exorbitant sum for someone to dig and refill the necessary hole (we heard of £1,500!!)
The vast majority of plans offer no guarantees on the cost of the actual burial (interment is the jargon), just the allowance hopefully indexed, so once again our advice is invaluable unless you want to interview 20+ salespeople most of whom won’t actually be sure.”
FAQ: What happens if the Funeral Director is sold or goes out of business?
“Provided you have invested through a formal prepaid funeral plan, the value of the plan should still be available. Contact the company to get this set up properly in good time, with a replacement funeral director if necessary.”
FAQ: “Should I consider Over 50s Insurance rather than a Funeral Plan? They seem to do the same thing, don’t they?
Far from it! The terminology is very confusing and two plans which sound very similar can be totally different in real life. Most insurance-based Over 50s plans are based on non-profit whole of life policies most of which have two MAJOR problems:
- The death benefit stays the same no matter how much the cost of the funeral rises – unless you keep taking out additional policies every few years – at increasingly high cost.
- This type of policy has NO CASH VALUE AT ANY TIME. That means that once you have missed a couple of payments, every penny is lost. When is that likely to happen? When you are getting old and nearer to your “sell by” date!
- AVOID even if they promise to give back any overpayments!!!
FAQ: “Do you charge for your services?”
No, we at the Prepaid Funeral Review do not, but we don’t hide the fact that we get paid a commission by most companies. Believe it or not, we do sometimes recommend companies which don’t pay us a bean, but fortunately, that is not often a problem! In 99% of cases, we are able to find some way of providing additional benefits to our clients over and above what they would have paid direct.
Funeral Plan Questions: Which is the Best Funeral Plan?
“There is no such thing! Every person’s requirements are that bit different. People don’t all live in the same place, nor near the same cemetery or crematorium. Some want no service, some a church one, some at the crematorium. Minister, priest, celebrant, family member to run the service? Cars for the family? Specific route to the service? Church service as well as cremation? Burial – do you have a plot, whose name is it in, when does the lease run out? Are you likely to move (a specific undertaker is unlikely to follow you!) Is security a top concern so newer companies are not welcome? How much is allowed for third party costs? Which costs are guaranteed.”