The cost of planning a funeral has risen significantly in the last decade.

That’s why more and more people are considering paying for their own funeral in advance, using a pre-paid funeral plan.

Find out more about how they work.  

What is a Pre-Paid Funeral Plan?

A pre-paid funeral plan can be added to an existing, or new, life insurance policy, in many cases. Or it can be sought as a stand-alone product.

In exchange for affordable monthly premiums, your family will gain access to a cash lump sum.  This can cover the costs of your burial/cremation, when the time inevitably comes.

As well as the money, you can also use the plan to outline your wishes for the ceremony. At a very difficult time for your loved ones, seeing your list of hymns/songs and arrangements can give them comfort and reduce some of the stress involved in giving you a dignified ‘send-off’. 

Why Should I Consider a Pre-Paid Funeral Plan?

• Funeral costs have risen rapidly in recent years, in all aspects of the proceedings including burial/cremation costs, the price of coffins, headstones and so on.
• Leaving your family or friends to pick up the bill could land them in thousands of pounds’ worth of debt. If you don’t have a life insurance policy or inheritance fund ring-fenced for them, they may have to put it on a credit card, use their personal savings, or take out a loan to pay for it all.
• If you have specific plans for your own funeral, a funeral payment plan is a great way to make these wishes known before you die.
• You can save your family time and effort in selecting a suitable funeral director. By naming your chosen director on your plan, they can come and collect your remains.  For recently bereaved families, thinking about these details can be distressing. Having these arrangements actioned with one phone call can ease this uncomfortable burden on them.

What Can Be Arranged in Advance for My Funeral?

You may have some very specific wishes for your own funeral. However, some areas you may want to think about planning for, for when your own time comes, may include;

• Burial or cremation wishes, including your chosen cemetery, or where you would like your ashes scattered.
• Who you would like in attendance at your funeral.
• Which readings, music, hymns, and prayers you would like.
• Who you would like to be made responsible for making the funeral arrangements.
• The funeral director nominated to prepare your remains for the funeral.
• Whether you would like your organs donated.
• Details of your chosen style of coffin, headstone, flowers, charities for donations etc.

For more on arrangement options for your own funeral, take look at our Funeral Planning FAQ's.

Let’s Look at a Funeral Plan Example

Neil took out a funeral plan 10 years ago, after his wife died and he had to plan her funeral. At the time, Neil had no backup savings to pay for it with. Eileen’s funeral in 2007 cost over £2,000.

Neil didn’t want to place the same financial burden on his children, so took out a £20 a month plan to cover himself for £4,600, when the time eventually comes for his own funeral. The average cost of a funeral has doubled in the last decade, so this pay-out should be enough to see all of his final wishes granted.

What are the Benefits of a Pre-Paid Funeral Plan?

• Freeze at Today’s Prices – As mentioned, funeral costs have risen and will continue to rise in the future. By taking out a funeral payment plan, many providers will fix the costs of the funeral to current prices.  This means you can rest-assured that your plan will cover everything it needs to.
• Help and Advice – If you are not sure of all the provisions you need, or what you could potentially have for your ceremony, the provider can help you plan.  This could save you and your family a lot of stress and give you the chance to organise a unique ceremony.
• No Hidden Costs – Some plans offer a guarantee that all third-party charges will be included in the plan. This means that there will be no sneaky hidden costs for your loved ones to deal with when the time comes.
• Flexible – If you move to another area before you die, many plans can be transferred to your new hometown, without incurring any extra arrangement fees. This may however, not be the case with all providers, so do make sure you check this is a feature of your plan, if you look to move.
• Protected Funds – A reputable funeral plan provider will protect your funds, until the time comes for them to be released. This means that your money will be safe regardless of what happens. For example, if your chosen funeral director goes out of business. In this case, the protected funds can be transferred to another local provider, in many cases. When choosing a provider, look for one which is a member of the Funeral Planning Authority (FPA) or National Federation Of Funeral Directors (NAFD), as they will be able to provide this extra protection for you.
• Age Limit – Some plans end when the policyholder reaches an advanced age (such as 90 years old). This can be helpful for elderly people who have paid into a scheme for many years. They can get a break from premiums and still receive all the funds needed for their funeral.
• Guaranteed Acceptance – Many plans have a guaranteed acceptance to applicants over a certain age. Most applications are also accepted without the need for a medical examination.

What are the Pitfalls of Pre-Paid Funeral Plans?

• Pay in More than you Get Out- With some plans, you pay a set premium every month, for an agreed lump sum payment. If you live for many years, it is possible that you will have paid in more than your loved ones will receive when you die. Some providers will help prevent this from happening, by putting a ‘cap’ on your premiums.
• Missing Payments, Policy Ends – Funeral plans need dedicated financial commitment. If, for any reason, you do not make a payment on your premiums, you may lose the money you have paid into your plan. This is why it is vital to speak to an independent financial advisor. They can help you weigh up your options and find the most affordable provider for you.
• Dying Soon After Taking out the Policy – Some providers may specify a waiting period before the full sum is payable.  In some cases, you may need to pay premiums for up to two years, before your full funeral plan can be realised. If you die during this initial period, your next of kin may have to pay the difference. 
• Inflexibility – Not all providers can offer the same level of funeral planning flexibility as others. For instance, you may be limited to a few funeral directors who can take on your plan. Or, you may be charged for amending your policy at a later date, under some agreements.

What are the Alternatives to Pre-Paid Funeral Plans?

• Life Insurance – A life insurance policy, can help you ring-fence funds to pay for your funeral. Take a look at our Guide to Life Insurance Types for more on this.
• Savings – If you would rather not pay for a funeral plan, you can keep some savings back to pay for your funeral instead.

If you would like to find out more about pre-paid funeral plans, get in touch with an expert funeral plan advisor now. They can offer you free advice and a no-obligation quote.