Funeral Plans. Are they worth it?
Funeral Plans are one of the best investments you can make. There, I said it!
It is little wonder then that the number of people setting up Funeral Plans increases year on year in spite of resistance from some families to discuss death or even consider preparing for it.
Each year Sunlife prepare a “cost of dying report” and the 2020 report shows that the average cost of a funeral in 2019 was £4,417. An increase of almost £200 or approximately 4% on the year before!
Over the last decade funeral costs have risen 62%. Twice the rate of petrol. If weekly wages had risen by the same rate over that period they would be £790 today. Instead they are only £585.
So how are people finding the money to pay?
Even for homeowners who have equity in their homes to cover the expenses, relying on this can still cause strain on the families left behind. As properties in the UK can take six to twelve months to sell, families are having to cover the expenses in the meantime.
- 30% had to use their own savings
- 22% of people had to borrow from family or friends
- 25% used credit cards
- 16% had to pay by instalments
- 15% had to sell belongings
*Of those surveyed, some gave more than one answer.
So lots of people are having to pay back money, often with interest, to banks, lenders or relatives when they are grieving.
What is a Funeral Plan?
Prepaid Funeral Plans have been available in the UK since the 1980’s and have provided a person the ability to arrange and pay for their own funeral – or that of another, directly with their chosen funeral director. The advantages of this are;
- They know what they are getting.
- They know what it will cost.
- The family do not have to go through the stress arranging it themselves.
More recently however, Funeral plans have evolved somewhat. The largest funeral directors in the UK have set up Trust funds to hold clients monies. So when they set up a funeral plan the costs will be met much further down the line. This means, if their costs have increased in that time, they do not need to ask the family for additional contributions. Making them a sound long term investment.
What this means is, If you had taken out a funeral plan in 2010 when the average funeral cost was £2,857 you would already have saved £1,744 today.
Easing the burden.
Not only is this an attractive saving, the benefit to families is immeasurable. When surveyed, 61% of people felt under pressure when arranging a funeral. 9% felt they needed to spend more on a funeral than they wanted to. 14% felt under pressure from other family members to organise a funeral in a different way.
With a prepaid Funeral Plan, you can state exactly what you want to happen. Saving any confusion or fall out.
Not only that, but your family have less running around to do as the funeral director is already aware of your wishes.
This means funeral plans can take a lot of pressure off loved ones giving them space and time to grieve.
What to look for in a funeral plan.
This is where it can get tricky. There are a lot of new funeral plan providers around. As it is an unregulated industry it is easy for somebody to set up as a funeral director with little or no training. Or even start a “funeral plan” company.
The Funeral planning authority self regulate funeral plan providers and have a strict code of conduct to always look for a registered provider.
Many funeral plan companies rely on selling their plans through third party call centres. These centres are incentivised to make a sale and may not always have your best interests at heart.
Try if you can to go direct to a funeral plan company. Or chose and agent that is directly authorised by them. Although they will still recieve a commission, reputable companies will do checks on their agents and often require them to carry out training before allowing them sell their plans.
Next, check what is not covered in your plan. Most providers do not cover the whole funeral cost and only contribute to certain parts of them.
There are some plans that will guarantee the cremation costs as well as the funeral directors. But most do not. This may lead to an additional cost to family at the time of need.
Cheaper is not always better.
Everything seems price driven these days. Although the Funeral plan market is very competetive, price is not always the right reason to buy.
When you invest in a funeral plan you have to trust that your plan will do what you want it to do in twenty years time. At a time when you can do nothing to change it and your family are counting on it most.
Choose a funeral plan provider that has been around a long time and can demonstrate that they are likely to still be around for a long time more.
The FPA have strict rules about the management of funds to ensure the security of the monies invested in a funeral plan.
Choosing a plan based on security is far better than price. Trying to save £100 now can cost far more later.
How can we help?
Reliance Wills have many years experience in Funeral plans and are approved agents of most large providers.
If you would like a no-obligation comparison or a quick chat about options, please feel free to get in touch through Facebook or email info@reliancewills.com