What are the pros and cons of a prepaid funeral plan in 2019?
In this post, we weigh these up in some detail to help you decide if having a prepaid funeral plan is right for you and your family.
Needless to say, different funeral plans will have varying pros and cons, and so we’ve looked at the pros and cons of funeral plans as a whole, as well as those for Co-op, our chosen provider.
Keep reading as we cover the following points;
- What a prepaid funeral plan is
- Funeral plan pros and cons
- The cost of a prepaid funeral plan
- Life insurance to cover a funeral
- Prepaid funeral payment plans
- Other ways to pay for a funeral
- Keeping your money safe and other helpful information.
| Pros of Prepaid Funeral Plans | Cons of Prepaid Funeral Plans |
|---|---|
| Avoid rising funeral costs | Dealing with the subject of your own death |
| Plan your funeral in advance | Tying up funds |
| Protect your family from financial worry | Cannot be taken overseas |
| Relieve family of making funeral arrangements | Not currently regulated by the FCA |
| Protect life insurance or savings | May not cover third-party costs |
| Premiums never increase |
What is a funeral plan?
In the UK, over 1.4 million people held a prepaid funeral plan in 2018[1].
A funeral plan means paying for your funeral in advance, either via a lump sum or instalments, to cover all the fees and services required from when you pass away until your burial or cremation.
It’s a contractual arrangement with a provider, who is responsible for executing the services agreed when taking out your plan.
A prepaid funeral plan is commonly taken out to avoid future rising funeral costs.
Particularly as the cost has more than doubled in the last 15 years and is expected to increase a further 20% by 2023[2].
So, are funeral plans a good idea?
How do funeral plans work?
It’s common for funeral plan providers to offer a tiered approach to their plans.
Each of the tiers provides a different level of service, starting at the most basic plan with the least flexibility, right up to the top plan with the most flexibility.
We offer Co-op traditional funeral plans from Simple to Gold level.
There are also other types of funeral plan available such as a tailored funeral plan or a green funeral plan.
See an example of the services included in their Simple and Gold plans for both burial and cremation below:
Funeral plans, are they worth it?
Prepaid funeral plan pros
Find the pros for a prepaid funeral plan outlined below:
PRO: Avoid rising funeral costs
A basic funeral costs on average £4,271 in the UK and this is expected to increase by almost 20% by 2023[2].
A prepaid plan allows you to pay for your funeral at today’s rate, saving your family money in the future.
Unlike life insurance, when a funeral plan is paid off you’re not required to continue paying payments.
PRO: Guaranteed acceptance, (no medical required)
Regardless of health or age, you’re guaranteed acceptance for a funeral plan.
Even if you’re over 80 or have a poor medical history and are unable to get affordable life insurance, you can secure a funeral plan.
PRO: Plan your funeral in advance
A prepaid funeral plan provides you with the flexibility to arrange your own funeral.
You would be able to liaise with the funeral director directly to plan out the details to your own personal preference.
PRO: Protect life insurance or savings
It’s possible you have a life insurance policy in place (or are looking to take one out), alongside a funeral plan.
You’d be in the position to protect your life insurance pay out from the increased cost of a funeral, meaning your family will receive more.
The proceeds from your policy could also be freed up to use in other ways.
PRO: Relieve family of funeral arrangements and protect them from financial worry
Most importantly, you’d have peace of mind knowing that your funeral is paid for and arranged to your satisfaction.
Sparing your loved ones from both the financial and emotional burden.
PRO: Premiums never increase
Unlike some life insurance policies, your funeral plan premiums don’t increase over time.
Compare Funeral Plans » Find Your Perfect Plan
Peace of mind with a Co-op prepaid funeral plan
Find the additional pros of a Co-op Funeralcare prepaid funeral plan (supplied by us) below…
PRO: Best price guarantee*
You can benefit from the best price guarantee* for funeral plans purchased through Reassured[3].
Just provide us with a like for like quotation on your chosen funeral plan and we’ll match it.
PRO: Co-op commitment
If you’re paying by monthly instalments and pass away after 12 months but before the balance is cleared, you’ll still be able to receive all the services arranged as part of your plan, at no additional cost*.
If you were to pass away within the first 12 months of your policy by natural causes and instalments still need to be paid, then your loved ones may need to pay the balance so your funeral can go ahead as arranged.
If they choose not to pay, then the funeral plan won’t be valid and all funds paid into the plan will be refunded, (excluding a cancellation fee).
PRO: FPA regulated (funds are protected)
Approximately 95% of funeral plan providers have joined the Funeral Planning Authority (FPA), a self-regulated body, in which to be a member you have to follow certain rules and codes of practice[4].
So, for that extra reassurance, you may decide to keep an eye out for FPA regulated providers when searching for a suitable funeral plan.
It’s obvious there are many pros to taking out a funeral plan, but what are the cons?
Prepaid funeral plan cons
Find the cons for a prepaid funeral plan outlined below:
CON: Dealing with the subject of your own death
Talking about your own death may be tricky and something you would rather put off. This is completely understandable and not uncommon.
After all, death is still very much a taboo subject in the UK[5].
A survey carried out by the Dying Matters Coalition revealed that more than two-thirds of people agreed that death is an uncomfortable topic and only 29% of those surveyed had discussed their wishes around dying.
Of these, 45% felt like it was because death felt a long way off and even 8% of 65-74-year-olds thought they were too young to discuss dying.
However, death is inevitable and organisations such as the Dying Matters Coalition believe that talking about death will help the bereaved.
The Dying Matters Coalition ‘aim to help people talk more openly about dying, death and bereavement, and to make plans for the end of life’.
CON: Tying up funds
Prepaid funeral plans do tie up funds that could otherwise be used for things whilst you’re alive.
For example, ticking things off your ultimate bucket list or treating your loved ones.
CON: Can’t be taken overseas
If you choose to emigrate overseas and you pass away whilst abroad, unfortunately, your funeral plan can’t be used.
If you’re on holiday when you pass away a funeral plan provider normally flies your body home, before carrying out the service as arranged.
CON: Not currently regulated by the FCA
At the moment, funeral plan providers are not regulated by the Financial Conduct Authority (FCA).
For those who don’t know, the FCA regulates the UK financial services industry.
They’re responsible for protecting consumers, keeping the finance sector stable and encouraging healthy competition between financial service providers.
With demand for funeral plans continuing to grow, the government are currently considering whether funeral plans should be regulated by the FCA, which will bring in tougher regulations in order to further protect customers.
CON: May not cover third-party costs
When researching your funeral plan options, it’s important to be aware that not all providers cover all the associated costs of a funeral, meaning your family will be left to make up the shortfall.
There are multiple third-party costs to consider, including:
- Transportation of deceased
- Cremation or burial fees
- Doctor fees
- Minister fees.
We work with Co-op Funeralcare who do cover third-party costs with all their funeral plans.
Their service also includes any advice or assistance your family may need to help them through their bereavement.
However, other providers such as Golden Charter, don’t cover all these additional costs.
CON: Burial plot not covered
Funeral plans don’t cover the cost of a burial plot, which can vary wildly in price across the UK.
Prepaid funeral plans cost
How much does it cost to prepay for a funeral?
As previously mentioned, the cost of a funeral is increasing at a rapid rate and this trend is set to continue.
The average funeral is estimated to be £12,749 by 2036[6].
However, you could avoid these huge increases by paying for a funeral at today’s price (currently £4,271 for a basic funeral[2]) through a prepaid funeral plan.
Your funeral plan expenses wouldn’t be affected by inflation; the amount you pay today will still cover all the same services and costs after you pass away.
Using the tiered approach, a prepaid funeral plan can be set to suit your budget.
For example, the Co-op Simple plan would be the cheapest option and the Gold plan would be the most expensive option.
Co-op offers a best price guarantee* with all their funeral plans.
All you need to do is provide a like for like quote on your preferred funeral plan and we’ll match the price.
Life insurance vs funeral plans
When looking to secure the cost of your funeral, choosing between life insurance and a funeral plan often comes into question.
The proceeds from a life insurance pay out tend to be significantly higher and can be used by your loved ones for whatever they deem fit.
In most instances, it’s likely this pay out will be sufficient to cover the cost of your funeral and still leave enough for your loved ones to enjoy.
However, the cost of funerals has risen by +122% over the past 15 years and shows no signs of slowing down[2].
As a result, depending on when you pass away, the cost is likely to have increased further, resulting in a larger percentage of your life insurance having to be spent on your funeral.
A funeral plan, on the other hand, can only be used for the purpose of your funeral and can’t provide your loved ones with a cash pay out.
However, it does mean you can secure today’s going rate for a funeral, avoiding any further increase in cost.
Once you have paid for your funeral plan, it’ll remain in place until it’s required, regardless of how long it is before you pass away.
Life insurance premiums for level term, decreasing term and whole of life are calculated based largely on your age, health, smoking status and lifestyle.
For example, someone over 50 who smokes and has a long history of poor health will find that their premiums are higher than someone who doesn’t.
Whereas, the cost of a funeral plan is not affected by your personal circumstances and is only influenced by the tier of plan you choose.
Choosing between life insurance and a funeral plan will be largely affected by what it is you’re looking to protect, whether or not your personal wellbeing is likely to make life insurance unaffordable and your budget.
Funeral payment plans
The funeral payment plans available will vary depending on the funeral plan provider.
For example, we offer several payment options:
- Fixed monthly instalments up to 12 months interest-free
- Monthly instalments over 2- 25 years, (this option is not interest-free and you wouldn’t be covered for the first 12 months. However, if you do pass away after 12 months and before all your instalments have been paid, your plan would still be in place and all services and costs will be covered)
- A single upfront payment for your funeral plan. (This provides immediate cover, giving you and your family peace of mind from day one).
What happens when a family can’t afford a funeral?
If your loved ones who are taking on the responsibility to arrange your funeral are receiving a particular income benefit, then they can apply for a funeral payment plan through the government to help cover costs[7].
This payment covers the core elements of a funeral, such as the burial or cremation fees, transport and doctor’s fees.
However, the payment usually doesn’t cover all relevant costs and the funds would need to be recovered by the council from your estate.
It’s not mandatory to have a funeral service and in some cases, the family choose to go ahead with the burial or cremation without having a ceremony.
Compare Funeral Plans » Find Your Best Deal
Paying for a funeral, (if you don’t have a prepaid funeral plan)
According to SunLife’s 2018 ‘The Cost of Dying report’, 33% of those surveyed said they had to pay for some or all of their loved one’s funeral.
Furthermore, 1 in 8 families said that finding the money to pay for the funeral caused them financial problems.
According to the same report, 74% of those surveyed think that the deceased should pay for their own funeral.
Other possible ways you can pay for a funeral:
- If you’ve sufficient savings to cover the funeral then this would be used, (once your estate has been released)
- If you’re entitled to death in service from your employer then this could cover the funeral costs, (however not all employers provide this benefit)
- A funeral can be paid using funds released from your estate, of which would pay back any family members who have paid upfront for the funeral
- If you’ve a life insurance policy, such as an over 50s plan, in place then the proceeds will be available to your family to help pay for a funeral.
It’s important to highlight that even if you’ve any of these financial provisions in place, your family would still be paying significantly more in the future.
What age can you start a funeral plan?
Most funeral plan providers will require you to be at least 18 years old to take out a funeral plan.
As a young person, you could save thousands, as the cost of funerals are likely to be much, much higher by the time you pass away.
Young people can also achieve the cheapest life insurance rates. Your life quote is usually based on your current personal circumstances, rather than how your life could be in the future.
As a young person, you’re also less likely to have a poor medical history and are less likely to fall ill in the near future, therefore insurers perceive you as low-risk.
What is the best prepaid funeral plan?
The best prepaid funeral plan will be the one most suited to your budget and one that will fulfil all your end of life wishes.
By using an FCA regulated broker service, such as Reassured, to compare both funeral plans and life insurance quotes, you’ll be able to find the right cover, at the best price.
Are funeral plans safe?
When purchasing a funeral plan it’s common to question whether your investment will be safe.
Currently, funeral plans aren’t regulated by the Financial Conduct Authority (FCA), meaning that there’s no legal framework overseeing the product.
However, within the industry, there’s a voluntary set of regulations governed by the Funeral Planning Authority (FPA).
Providers can opt to follow this set of regulations and are overseen by the FPA to ensure the protection of customers and their money.
All funeral plans provided by Reassured, are from FPA providers, providing you with confidence that your investment is safe.
Furthermore, as an FCA regulated life insurance broker, we follow the same strict processes we apply to life insurance when arranging a funeral plan, providing further peace of mind.
Buy a funeral plan
When searching for the best funeral plans, it would be sensible to compare quotes to ensure you are getting the best deal.
At Reassured, we can do this for you, as well as provide all the necessary information you need to help you make a fully informed decision.
Our awarding-winning brokerage service is completely free to use.
So, what are you waiting for?
Compare quotes, protect your loved ones and buy a funeral plan today.
*This offer is not applicable to those paying by instalment plan.
Sources:
[1] https://funeralplanningauthority.co.uk/statistics/
[2] https://www.sunlife.co.uk/siteassets/documents/cost-of-dying/cost-of-dying-report-2018.pdf
[3] https://www.co-operativefuneralcare.co.uk/pre-paid-funeral-plans/
[4] https://www.gov.uk/government/news/tougher-regulation-for-funeral-plan-providers
[5] https://www.dyingmatters.org/news/death-still-taboo-brits
[6] https://www.goldencharter.co.uk/funeral-plans/
[7] https://www.gov.uk/funeral-payments
Our providers
At Reassured, we will provide you with quotes from Co-op funeral care, as well as any information required regarding the best funeral plans.
This allows you to make a fully informed decision.
All of the funeral plans we provide are fully regulated by the Funeral Planning Authority (FPA) ensuring you and your money are protected.
