Funeral plans: What is a funeral plan?
If you’re worried about your family being able to afford your funeral when you die, you might have considered a funeral plan. But how does it work?
How does a funeral plan work and how much does it cost?
At its simplest, a funeral plan allows you to pay up-front for your funeral so your relatives don’t have to cover the costs themselves - although they are allowed to pay for your funeral using money from your estate as soon as you die (and it's not subject to inheritance tax).
You can buy a funeral plan from either a funeral-plan provider or directly from a funeral director. You have the choice of either paying a lump sum or monthly instalments, usually over one to ten years. One-off payments usually range between £3,000 and £5,000.
What’s included in a funeral plan?
A funeral plan will not include everything you need for a funeral. Exactly what is covered will vary from provider to provider.
Funeral plans may cover viewings of the deceased, a limousine procession and a church service, but burial plots are often left out. Other costs, not traditionally met by a funeral director, are also not included, such as the cost of flowers.
In addition, some costs may not be met fully, and your family may have to pay the rest. For example, many providers only contribute towards the cost of cremation or burial. As always, check the details to make sure you know exactly what you are buying.
Age Concern and Dignity guarantee the price of cremation, but only pay a contribution towards burial costs. Golden Leaves, on the other hand, has a set contribution to burial or cremation costs.
The Co-operative and Family Funerals Trust guarantee to cover all costs for a burial or a cremation, however the cost of a burial plot is not included.
Find out more: The cost of funeral plans
Is my money safe?
To safeguard your plan, your provider will either place it in a trust fund or invest it in an insurance policy that pays out when you die.
The Financial Conduct Authority doesn’t directly regulate funeral plans, but it does have rules to safeguard your money if it is placed in a trust or invested in an insurance policy.
There is a professional body for providers called the Funeral Planning Authority (FPA), which has a code of conduct which all of its member must comply with.
As part of the code, the FPA’s members and the FPA itself pledge that if a provider goes bust they will look into paying for funerals that are covered by funeral plans.
You may also be protected under section 75 of the Consumer Credit Act 1974. Under the Act, a credit card provider must protect purchases over £100 if there is a problem with good and services you have paid for, or if they the company you are buying from goes bust.
If you are paying for your funeral plan in total upfront, you can benefit from section 75 protection by putting part of the bill on your credit card.
If you want to pay by monthly instalments you can also gain protection by using the a credit card to pay any deposits or asking your provider to pay part of the bill up front using the card.
- Writing a will? Take a look at our expert guide
- Read our guide to setting up power of attorney
- For a solution tailored to your needs, call our experts on the Which? Money Helpline
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