Prepaid Funeral Plans
The death of a loved one is always difficult to deal with and this can be compounded by funeral costs of up to £4,300 on average. Increasing numbers of people are now taking out funeral plans so they know most of the cost of their funeral has been covered before they die, to ensure their family isn't left to foot a hefty bill. We take you through all you need to know.
Warning. There's currently no statutory regulator for the funeral plan sector, only a voluntary regulator called the Funeral Planning Authority (FPA), which covers 95% of providers. There's been reports of rogue practices among providers not registered with the FPA, so it's best to only buy from a registered provider as you're more likely to get the funeral you paid for.
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Funeral Plans: The 8 need-to-knows
A fifth of all UK funerals are now paid for in advance via a funeral plan, which covers many of the costs associated with your funeral, such as a coffin and hearse. It allows anyone over the age of 50 (18+ with some plans) to pay for and set out the arrangements of your funeral now, so when you die, your family will have little financial and/or organisational responsibility.
What is a funeral plan?
You buy the plan from a funeral plan provider (see best buys below), choosing from the different types of packages – a basic can cost £3,000 and a top package with everything included up to £5,000.
Many providers will let you choose a cremation or burial funeral plan. The initial costs are similar, but watch out for any additional burial or cremation costs that may not be included, for example, the cost of a burial plot and a headstone which can cost thousands of pounds extra.
There will be a choice of packages, but almost all plans guarantee funeral director services. You can expect:
A coffin and hearse.
Care of the body.
Transport of the body to the funeral home.
- A minister to conduct the ceremony.
- Visiting the body in a chapel of rest.
They then either include third-party costs such as cremation and doctor's fees as standard (where applicable), or have an allowance which should cover these, but isn't guaranteed to if prices have gone up by the time of the funeral. If the allowance turns out to be insufficient, the family or estate will have to pay the difference. Before paying, check you're getting what you want as every plan has its differences.
What's not generally included:
Burial fees, including cost of burial plot and digging a grave.
- Catering for a wake.
- Embalming of the body.
When the time comes, your family should let the plan provider or funeral director know you've passed away so arrangements can be made.
A basic funeral plan can cost around £3,000, though what this covers will be fairly limited and just include the essentials, such as a simple coffin, a standard funeral procession route, a set day and set times the family can visit the chapel.
The most expensive funeral plan can cost up to £5,000 and is a lot more flexible. For example, you'll get a coffin made with more luxurious materials, two or more limousines for your family, flexible visits to the chapel and a choice of funeral day, as well as dedicated family bereavement support.
Can I plan every detail of the funeral?
Depending on how much you're willing to pay, when buying the plan you can also tell the provider exactly what you want included in your funeral – from the type of coffin, specific music played, even the food you want served. Some of these extras won't necessarily be paid for within the plan, it's just written down so your family are aware when the time comes – so you'll need to let your family know they might need to pay extra for this.
Can you choose your own funeral director?
Some funeral plan providers let you pick your own funeral director, who will arrange the funeral – though they usually have a list to choose from. Others will pick one for you. If it's important to you that your funeral is organised by a particular funeral director, then check with the plan provider and/or the funeral director that you can do this before you buy it.
Is a funeral plan worth it?
If you have the money to pay for a funeral plan now and you're the sort of person who likes to be in control of things, while at the same time taking the pressure off your family when the time comes, both financially and emotionally – then a funeral plan is a good option for you.
Obviously it is a financial gamble to a certain extent as we don't know what the prices of funerals will be like in the future. But a big boon of paying for your funeral now is that if prices do rise in the future, the basic funeral director services are protected against inflation.
For example, if you buy a funeral plan which costs £3,000 today, but don't die for another 10 years. If in that 10 years the cost of everything increased (which is likely) and now the same funeral costs £5,000, as your funeral plan is protected, your family won't be asked to pay the £2,000 difference.
However, third-party costs (eg, cremation fees) may have risen and your family might have to pay extra depending on what guarantees were or weren't in the contract, so you need to check before taking out a plan.
You could simply set aside a set amount for your funeral into a savings account and let your family know what you want the money to be used for. However, they would still have to make all the arrangements themselves and could find there is not enough to cover the price of a funeral at the time.
Your money isn't protected like a savings account
The key thing to understand about this market is it is not regulated. This means your money isn't protected like in a savings account – where the first £85,000 is protected in the event of the bank or building society going bust – although discussions are ongoing to see whether this is an option.
However, there is a voluntary organisation set up by the industry to regulate providers called the Funeral Planning Authority (FPA), which companies can choose to sign up to. It says 95% of funeral plans are currently offered by its registered providers, which must abide by a strict set of rules and code of practice.
Every funeral plan provider, whether FPA-registered or not, must legally invest the money to pay for the funeral separately from the provider in either an insurance policy with a regulated insurer, or in a trust fund with independent trustees. This should mean if anything happens to the provider the money is ring-fenced and protected, so you won't lose it.
If you buy a plan from an FPA-registered provider, then as part of its checks, the FPA will ensure the provider has invested your money properly. It'll also help with any complaints you have. In the best buys below, we only feature providers signed up to the FPA.
Your money being ring fenced doesn't necessarily mean your funeral will still be covered if the funeral plan provider went bust, though if the provider is registered with it, the FPA will endeavour to make sure your funeral is delivered by another of its registered providers across the UK. Depending on the contract the provider had with the funeral director, if the provider went bust it might just mean all your money is returned to you, and you no longer get the funeral you wanted.
It's not a legal requirement for providers to be registered with the FPA, but most funeral plan providers including the big ones such as the Co-op, Dignity and Golden Charter (which covers many small independents) are signed up and consequently are subject to external scrutiny. You can find out if your provider is registered on the FPA website.
What if I have a complaint?
If you have a complaint about the plan provider, you can take it to the FPA to resolve if you have no luck with the plan provider first. They can engage an arbitrator to settle your dispute, and the resolution is then legally binding. Even if it doesn't reach arbitration, most funeral directors will follow the decision of the FPA.
Cash paid into a funeral plan is sheltered from the taxman
One bonus of a funeral plan is that once paid for, it isn't counted towards your estate, so it's excluded from inheritance tax charges when you die. If instead you'd chosen to keep money aside in a savings account to pay for your funeral, this does form part of your estate and is included in the total value of your estate for inheritance tax purposes.
The person who pays for the funeral may be able to get the money back from the estate eventually, but if you have to wait for the probate process to be completed this could take anywhere from nine to 12 months – and whether the money is released or not is not guaranteed.
There are four ways to pay for your funeral plan
Most funeral plan providers have various payment methods. If you don't have the lump sum to pay straight away, you can pay in instalments. There are four different options:
A good option and the most popular if you have the lump sum. It means you won't have to worry about ongoing monthly payments which could cost extra, or any of your family having to make repayments if you die before you've finished paying it off.
This is best option if you don't have the full lump sum but can clear the full amount within 12 months as you're not usually charged extra, so in effect you're getting to pay off your plan interest-free for a year.
But the downside is that if you die within the 12 months and haven't finished paying off the plan, your family will be asked for the remaining balance. If they don't pay, your plan could be cancelled and any money you've paid returned to your estate, minus a cancellation charge which could be as much as £800.
If you don't have the money now or can't pay in under a year, and you really want a funeral plan, you can spread your payments for up to 30 years. But the cost will be typically 10% more (though could be higher depending how long you want to spread the payments for).
If you die before repaying the full balance, your family will be asked to pay the remainder. If they don't, your plan may be cancelled for a hefty charge and any money you've already paid returned to your estate.
Not many of these are sold any more, but here you pay a fixed amount each month (it varies depending on your age) until you die or until your 90th birthday, whichever is sooner.
Generally your fixed monthly payments would be lower than paying by option C above, but because you could potentially be paying over a much longer time period, overall you'll likely be paying in more – unless you die earlier than expected.
WARNING! There is a real danger you could end up paying in more than the funeral will actually cost if you pay monthly until you die.
Tell your loved ones you have a funeral plan
When you die, whoever is looking after your estate will need to notify the funeral plan provider or your nominated funeral director who will arrange and pay for the funeral, so it's important you tell people you have a plan.
If you don't document it, but your family think you had a plan and just don't know who you bought it from and what the details are, the FPA has a trace a funeral plan facility on its website.
The funeral plan provider will keep a copy of everything you have requested as part of your plan, so as long as your family know who the funeral plan provider is, they don't have to track down any specific documents, but it's always a good idea to have your own copy and ensure everyone who needs to knows where it is when the time comes.
Don't confuse funeral plans with over-50s life insurance plans
We're not a fan of over-50s life insurance plans, where for most people you end up paying in far more than you would get out. There has also been much consumer confusion following misleading promotion of them, over how much they could deliver, especially regarding funeral costs.
Funeral plans are different. That's because you can pay in one go up front, or a set amount each month for a set period of time (typically for up to five years or less) – so there doesn't have to be any ongoing payments for life. Also, once bought, certain basic services you want in your funeral are guaranteed to be provided. The rest, depending on the contract, may be partially paid.
Consider whether you need the money to live on now
If you need the money more desperately now, then you'll need to consider whether a funeral plan is the right option for you. Also, bluntly, your funeral will then be down to your family to arrange, so won't be your problem. If there's enough money left in your estate when you die, the funeral can be paid for from that.
Below are our top pick of standardised, widely available funeral plan providers. We've analysed them based on price and what you get as part of the plan. But as each funeral plan is different and can be tailored to an individual's needs, you'll need to ensure the plan you buy is suitable for you.
All the funeral plan providers below are registered with the Funeral Planning Authority (FPA), which means they have signed up to being independently scrutinised.
Dignity has four different plan packages to choose from and has cut its prices by £100s. These now range from £2,795 to £3,795 until 30 April 2019.
These prices are the lowest of our three picks - on paper. If you go for a burial, where the funeral takes place could mean a Dignity plan won't cover all the costs. It'll give you an allowance of £1,220 to use towards burial and minister's fees (this increases each year in line with inflation). While this may be enough to cover a burial in certain parts of the country, if you're in London for example it may not be, and your family will have to pay for any extra costs. Though if you don't use it all, Dignity will refund any remaining money to your estate.
If you choose a cremation ceremony, the total cost of the cremation and the minister's fees are covered in all of its plans.
Doctors don't always require fees so these aren't included in Dignity's plans. Plus, if you pay for anything additional as part of your plan, the cost of this will also increase though not necessarily in line with inflation.
- Cost: £2,795 (Limited), £3,195 (Amber), £3,550 (Pearl), £3,795 (Diamond).
- Choice of funeral director? No. Dignity picks, though it can be local to you.
- Choice of day/date? Yes, but restricted days and times on Limited plan.
- Min age to take out policy: 50.
- How to pay: Lump sum or instalments.
- Cancellation charge: £249.
- Can I put two names on the funeral plan? You can do a dual policy at a cost of an additional £75 – it pays out for the first person to pass.
- What's not included? Typical things not included are the cost of embalming the body, flowers, catering, newspaper obituaries, removing a pacemaker or artificial limbs, carrying out your funeral on a weekend or bank holiday, and any doctor's or coroner's fees.
- Can I make changes to my plan once I've bought it? You can on all the plans apart from the Limited plan. Changes such as a change of an address won't incur any extra cost, but any changes to things such as a change of coffin would. Prices can be discussed when you call to make the changes.
Buy any of Co-op Funeralcare's four plans online and you'll save £100 on their high street funeral parlour prices. Starting at £2,895 online, the packages cost more than Dignity's but the essentials are covered.
With the Co-op you can choose between a cremation or a burial plan, and the Co-op guarantees to pay for all the essential costs related to these – so for a cremation your plan will cover the cost of all crematorium fees (but not the disposal of ashes), minister or officiant's fees and fees for cremation documents.
With a burial plan, the costs covered are preparation of the grave (but not the actual plot or headstone), costs for a ceremony and the minister or officiant's fees.
The Co-op also pays for doctor's fees, embalming (not on its basic plan though) and the minister or officiant's fees.
- Cost: £2,995 (Simple), £3,395 (Bronze), £3,750 (Silver), £3,999 (Gold). Minus £100 discount if you buy online.
- Choice of funeral director? No, must use Co-op.
- Choice of day/date? Yes, but restricted days and times on Simple package.
- Min age to take out policy: 18, or 50 for fixed monthly repayments (you have to be 80 by the time the payments end).
- How to pay: Lump sum or instalments.
- Cancellation charge: £250.
- Can I put two names on the funeral plan? Yes, you can put two names against the funeral plan – it pays out for the first person to pass.
- What's not included? The cost of flowers, music, catering, newspaper obituaries, removing a pacemaker or artificial limbs aren't included on any plan. Read T&Cs carefully to check if anything else is not included in your chosen plan.
- Can I make changes to my plan once I've bought it? No, once you've bought your plan with the Co-op you won't be able to make any changes to it – though you can upgrade to a higher plan. So you'll need to be certain of what you want before you buy it.
More basic with limited contribution to third-party costs, but you can choose funeral director
Like Dignity and the Co-op, you can choose from four plan packages with Golden Charter.
Unlike the Co-op, which covers essential costs, Golden Charter gives an allowance towards third-party costs for cremation, burial fees and officiant fees. At £1,100 - or £800 with the cheapest plan - it's smaller than Dignity's. It's worth bearing in mind these costs rise yearly. If the costs are more than this, your family may be asked to pay the difference.
It does however have a larger selection of around 3,000 funeral directors to choose from and you can pick the one you want yourself.
- Cost: £2,895 (Value), £3,495 (Standard), £3,850 (Select), £4,099 (Premier).
- Choice of funeral director? Yes.
- Choice of day/date? Yes, but not on the Value plan.
- Min age to take out policy: No minimum age.
- How to pay: Lump sum or instalments.
- Cancellation charge: £249.
- Can I put two names on the funeral plan? Yes, once it's fully paid and hasn't been funded via a life assurance plan.
- What's not included? Check your plan carefully as each one will have different things excluded.
- Can I make changes to my plan once I've bought it? You can on all the plans apart from the Value plan. Changes on the other three plans won't incur a cost unless you are upgrading an item such as the coffin. This can be discussed if you call to make changes.
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Funeral Plans Q&A
First complain to the provider itself, it should be able to resolve your issue. If you aren't happy with the resolution, you can take the complaint further to the FPA if the provider is registered with it. If the complaint is for something that happens once the plan is put into action, a relative can complain, although it would normally be restricted to an executor or the relative named on the plan.
If you bought a plan with a provider that isn't registered with the FPA, then you can take your complaint further to Trading Standards or Citizens Advice.
If your complaint is about the funeral director, not the plan provider, then you can contact one of the two funeral director trade bodies, National Association of Funeral Directors (NAFD) or The National Society of Allied and Independent Funeral Directors (SAIF).
When you buy a funeral plan you'll need to tell the provider which funeral director you want it to arrange your funeral with. So if you later move house, you'll need to see if you can change funeral directors.
Many of the plan providers will allow you to chose another funeral director should you need to, but some may charge a fee to do it, or even say you can only move within 15-20 miles from the funeral director. Check the terms of your funeral plan carefully before buying.
Some of the funeral plans allow you to alter your plan at any time without any administration cost. But if you want additional features added, there may be a cost for the service itself which you will need to pay. Check the T&Cs with your plan provider before buying a plan, as many of the cheapest plan options don't allow amendments once bought.
Also if you are adding extra services, it's worth checking if the amount you have paid will increase in line with inflation. If it doesn't, there's a risk your family will have to pay extra later on.
Yes, but it just might not be the funeral you want. When you die, the executors of your estate will have access to your money to arrange your funeral. If there's not enough money in your estate to pay for the funeral and if the the person organising your funeral is on a low income, they may in some circumstances qualify to get a funeral payment from the Government to pay for it.
How much they get will vary depending on their circumstances, but the payments will usually cover the burial/cremation fee, cost of documents prepared, transport to the funeral, and up to £700 for other funeral director costs, such as the coffin and hearse. The funeral payment will need to be repaid, and it's usually taken from your estate before any debts or bills are repaid.
Alternatively, if there's no money in your estate or there's nobody to arrange one for you, your local council can arrange a 'public health funeral'. This will be a very basic funeral on a set day, though how the service will run varies from council to council.
If something is written in the deceased's will which is different to the funeral plan, even if the will was written before the funeral plan, what has been covered and paid for in the funeral plan will be executed unless the executors decide they want to go with the wishes in the will. Then it will be down to them to make the necessary changes and pay for any costs this may incur.
It depends. Some plan providers let you put two names on the plan you purchase – so it can be used for either person, whoever dies first. Other providers only allow one name on the funeral plan. If this is something you're interested in, it's best to check with the funeral plan provider.
It depends on the provider and what payment plan you've chosen. If you're paying by monthly instalments between 1-30 years, then generally you'll be given 30-60 days to make the missed payment. If you miss that, your plan will be cancelled and you'll get all your money back, minus the cancellation charge.
If you're paying by ongoing fixed monthly payments (option D, which we warn against doing), your plan could be cancelled and you'll receive nothing back.