What are funeral plans and could they save you money?
A funeral plan allows you to pay for your funeral in advance, either in installments or with a single payment. This can help lock in the cost at today’s prices, which can be especially helpful since the cost of a funeral is doubling every ten years and increasing at more than twice the rate of inflation.
For example, if you purchase a plan three years before you die and the cost of your funeral is average, you could save over £1,000 compared to paying for the funeral at the time of your death.
By spreading the cost of a funeral over time, you can make an otherwise large expense more affordable. However, having a funeral plan is not just about money. It allows you to make funeral plans from Victoria Funeral Home yourself, often with the funeral director who will arrange it. That may be easier for your family, who otherwise would have to plan the funeral at an already difficult time and possibly pay for it.
When you buy a funeral plan, you don’t have to worry about your loved ones having to pay for your funeral costs later. Instead, the funeral costs are prepaid, so your loved ones can just focus on giving you the send-off you deserve. (johnsonstring)
Are funeral plans regulated?
Funeral plan providers are not held to the same standards as financial product providers, such as banks. This is because funerals plans are not considered investment products in the same way. However, many funeral plan providers anticipate regulations and therefore invest money in line with the Financial Services and Markets Act 2000. They also market their products according to FCA requirements.
Additionally, a number of high profile plan providers have formed an association called the Funeral Planning Authority (FPA). To become a member, a provider must demonstrate that it can operate under the association’s code of practice.
One of the primary aims of the code is to safeguard client money. Rules include that all payments made by customers must be placed into an independently managed trust fund or into a whole of life insurance policy; and that members must have their finances and investment procedures reviewed by the association.
There are other funeral plan providers who work with the National Federation of Funeral Directors (NFFD). However, being a member of this association does not provide any more legal protection for money in a funeral plan.
One way of gaining peace of mind that your money is safe is to make some of the payments using a credit card. If you don’t buy the entire plan upfront, you would still be protected under the Consumer Credit Act if you made a first payment of at least £100 using a credit card, then the rest by regular instalment from your bank account.
Should you buy from a funeral plan provider or a funeral director?
When you’re looking to buy a funeral plan, you have the option to go either directly to a funeral director or through a specialist provider.
There are advantages to using a provider over an individual business. For example, providers usually have arrangements with multiple directors. This can be beneficial if you suddenly need to relocate and the funeral director you were previously working with doesn’t cover that area. Also, going through a provider is often quicker and less of a financial risk.
What if a funeral director goes out of business?
If you have bought a plan from a funeral plan provider, the provider will be able to keep your plan active by referring you to another director within their network if the original director you purchased from goes out of business.
However, if you buy a plan directly from a funeral director, you may not be able to transfer your plan as easily to another director if needed. This is because the combination of services that you have bought may not be available, or available at the same price, with another director. funeral plan providers have agreed set packages of services with each director in their network so that each customer receives a standardized service.
Is a funeral plan good value?
Funeral costs are rising at an alarming rate, and if you want to save money in the long run, it’s best to buy a funeral plan now. Keep in mind, though, that different funeral providers offer different plans with different levels of coverage.
A cheaper plan might only cover the basics, while a more expensive plan might cover more costs, but up to a certain limit. For example, burial plots are often not fully covered by funeral plans. Also, there are some items that are not covered by any plan, such as the cost of live music.
