A funeral plan is a means of setting aside the money that will be needed for your funeral. There are numerous providers with different levels of cover for you to consider, from 50+ to later years. From July 2022 funeral plans will be regulated by the Financial Conduct Authority, so they will be regulated in the same way that most other financial products are regulated.
Your Funeral Plan: #3 things you need to know
Before you take out a funeral plan, there are some key considerations that you should make. Like any financial investment, you should think about what is best for you, your family, and whether this is the best investment vehicle for you, or if there is another, more suitable means of paying for your funeral.
1. Funeral Costs Rise
With a pre-paid funeral plan in place, you can be assured that the plan will cover the cost of what it is intended to cover. Like everything, the constituent parts of funerals like burials, cremations, and so on, are subject to inflation. The point at which you take out your funeral plan with your preferred financial arrangement is the point at which you will know which aspects of your funeral will be paid for, irrespective of inflation and rising costs. Some providers will invest your money into a trust fund, others into insurance policies. in this case you are protected by the FCA. You may also have some protections under Section 75 of the Consumer Credit Act 1974.
2. Everything is arranged in your Funeral Plan
Some (but not all) funeral plan providers will allow you to leave instructions with your funeral plan. If there are particular things that you want to happen, finding a provider that can include this detail could be the best option for you if you decide to invest in a funeral plan. At a time when your family will be in mourning and quite possibly in shock at your loss, having the finances and instructions in place can lift the burden of organising and paying for your funeral. It can be a stressful, harrowing experience for those people who are organising the funeral. Those people are most likely to be your surviving spouse or children, who are the very people feeling your loss the most acutely.
3. Some Costs may not be covered in a Funeral Plan
It’s important to be aware that different funeral plans will offer different levels of cover. There are some things that your plan may not include:
- Burial Plots
- The Wake
With different levels of cover, cost, and terms, it’s important to consider what you want for your funeral, consider your budget, and what you’re willing to pay. Are there things that you really want to have or happen, and is the policy that you’re looking at going to deliver them? So compare plans. That may be from the same provider, or different providers, to fit the best plan to your requirements. Of course, taking advice from a professional is also a good idea, as they will be able to advise you along the way to making your final decision.
Other Options to pay for your Funeral
You can pay for your funeral in any way that you choose. Some other options could be:
ISA or other savings account.
Remember that in this case, while your investment will attract interest, it will also be subject to inflation over time. So whilst there will be money available, it is possible that you will leave a shortfall for your family, especially if you’ve left particular instructions.
Your Estate Pays
Money can be taken from your estate to pay for your funeral. In this case, this is an expense that can be taken before any inheritance tax applies, so it is effectively tax-free. However, remember that inflation will still apply to what you considered could leave a shortfall and more money from your estate could be needed.
Over 50s Life Insurance
This is an insurance plan that pays out to your family when you die. You pay installments every month. As a cash investment it will still be subject to inflation so what you pay in could be worth less when it pays out, and so could leave a shortfall.
However you decide to pay for your funeral, decisions must be made, so why not make those arrangements yourself. That takes the pressure off a grieving family and gives you the sendoff that you would have wanted. We’re here to help guide you with your choice of funeral plan if you opt to make this investment, so get in touch with a member of our team.