How Do Pre-Paid Funeral Plans Work?

Pre-paid funeral plans are precisely what is says on the tin! 

You pay for the funeral over a period of time, thus not leaving family and friends to pick up the bill when the unfortunate happens. A funeral plan price does increase yearly based on the average UK funeral price increase.

Getting a funeral plan in place can be a very wise idea when you consider how much funeral prices have increased over the last few years. 

Looking for other information on funeral plans? This guide has info on 'How do pre-paid funeral plans work?' We have also written extensively about:

• - Are funeral plans regulated?
• - How much do funeral plans costs?
• - How many funeral plans can you have?
• - Monthly Funeral plan costs explained
• - What happens if I die midway through the plan?
• - Funeral plan - vs - life insurance - what is the difference?

We update all our guides regularly. If you are researching funeral plans and we haven't got an exact guide that helps you, keep coming back as we update daily.

UK Regional Funeral Plan Price Increases

The below chart shows the regions in the UK with the highest percentage funeral cost increase; the average cost and the costs per funeral for the next couple of years based on the average percentage increase the industry has seen.

Based on these numbers, it’s no wonder that more and more people are looking to lock in the price of a funeral using a funeral plan.

Couple this with the Financial Conduct Authority about to take charge of regulating the industry which will provide consumers with more peace of mind about their money the sector looks set for a huge increase in plans.

However, consumers need to understand that most pre-paid funeral plans don’t cover absolutely everything associated with a funeral, so, sadly, there could still be some additional fees to pay.

If you are planning on setting up a pre-paid funeral plan, conducting some research is key. The critical research points are;

• What does the pre-paid Funeral plan cover?
• What does the pre-paid funeral plan NOT cover
• What are the monthly costs associated with the plan
• How safe is my money
• Am I getting the best deal possible?

We have tried to answer as many of the questions as possible, so continue reading and get the full details.

What Does a Pre-Paid Funeral Plan Cover, and What Doesn’t It Cover?

This is where research is vital.  As we wrote about in our article about Funeral plans being regulated, we named the companies that are currently authorised by the ‘Funeral Planning Authority'.

Each pre-paid funeral plan company has;

• A different number of funeral directors
• Some cover cremation costs some don’t
• Some cover burial costs, some don’t
• Some cover different standard coffin types
• Most don’t cover mourners limo/cars
• Some cover ministers fees, some don’t
• Some include Dr’s fees; some don’t

So you see research is critical. 

If you want the pre-paid funeral plan to cover all costs, so family and friends are not left with a bill, then these things need to be considered and discussed.

Funeral Plans: What Are the Monthly Costs Associated With the Plan?

All pre-paid funeral plan companies let you spread the cost of the plan over a number of years, and some companies even allow you to extend that should you wish.

The monthly fees vary per provider, which is why research is critical. It would be best if you made sure the plan cost is covering everything you envisaged and want it to cover.

The monthly plan arrangement is between 1 and 25 years, depending on your age and when you take the plan out.

If you are 35 and looking for a plan you the length of time is going to be different and the monthly instalments cheaper than if you are 55 or 75 years old.

Depending on the company offering the plan, your age and the plan length, you will be paying between £20 - £250.00 and probably a 1st-month deposit.

Should I Use Savings Rather Than Take Out a Prepayment Funeral Plan?

This is a question asked by many people, one which is fairly easy to answer. As and when you die, the chances are that you will leave behind a partner, family, children, etc. who may have been financially dependent upon you.

Therefore diverting your savings towards your funeral costs, with the ever-growing cost of funerals, significantly reduces this financial support. It is also worth noting that when you take out a funeral plan, you are in effect, freezing the cost of your funeral at today’s prices. This can have a huge impact going forward!

Can I Take Out a Prepaid Funeral Plan for Somebody Else?

There has certainly been an increase in the number of people taking out funeral plans for other people. If the person is 50 over, there is no need for them to take a medical which makes the process much simpler. When you consider that in 2019 the average cost of a cremation in the UK was £3946 and £4894 for burial, these are significant costs which will only increase going forward.

Do I Need to Take a Medical?

If you are aged, 50 or over the chances are that you will be accepted for a prepaid funeral plan without taking a medical. The situation may be a little different if you are under 50 years of age, but these issues will vary between funeral plan providers. As a consequence, it is probably sensible to take advice when looking at taking out a funeral plan.

Can I Personalise My Prepayment Funeral?

For many people, one of the great benefits of taking out a prepaid funeral plan is the fact that they can personalise the ceremony. While many people may add little quirks to their funeral on a serious note, this takes away the pressure and potential conflicts between family members when organising your funeral.

They will simply abide by your instructions with as little input from other parties as you see fit. Unfortunately, in times of bereavement, it can be very easy for people to fall out and even lose touch in the longer term.

Can I Prepay a Burial Funeral?

Yes. The average cost of a cremation funeral in the UK in 2019 was just under £5000. So, if you were to take out a prepaid plan today, the cost would be fixed, and you would avoid the inevitable increase in funeral costs going forward.

While we know the average cost of a cremation in the UK in 2019, there is nothing stopping you adding additional extras or even removing some elements of the service.

Can I Prepay a Cremation Funeral?

Yes. The average cost of a cremation in the UK in 2019 stood at £3946. So, if you were to take out a prepayment funeral plan today, then you would effectively freeze the cost. Even though discussing a prepaid funeral plan is not exactly easy, for many people, it can be their way of reducing the pressure on loved ones left behind.

It is worth noting that you will have flexibility with regards to what does and does not happen at your funeral - which will impact the price.

Funeral Plans: How Safe Is My Money?

At the moment, Funeral plans are not protected by the FCA. However, the government have concluded their analysis and the FCA are going to regulate the industry; you can read more about the governments guidelines here.

As the FCA does not currently govern the industry, there is no consumer protection on your money. However, the industry is self-regulated by the Funeral Planning Authority who have regulated since 2002, and you should only take a plan out with a company which is recommended by the Funeral Planning Authority.

Funeral Plans: Am I Getting the Best Deal Possible?

In summary, before you decide to pay the deposit and start a pre-paid funeral plan, you should carefully research all the companies offering plans. As we have detailed, they all differ, and you need to make sure you are getting the best and most appropriate cover based on your circumstances.

If you have a personal financial advisor, it is certainly worth discussing with them.

How Can Money Savings Advice Help You With a Funeral Plan?

Here at Money Savings Advice, we have partnered with some of the UK’s leading Funeral Plan brokers. They have already helped thousands of people get the best Funeral Plan deal and they can do the same for you.

Choosing an independent adviser means they won’t recommend a scheme unless they are sure it is in your best interests. Their advice is also regulated by the FCA, which gives you an additional layer of protection.

If you would like to speak to one of these brokers who can provide you with a ‘whole market quote’ then click on the below and answer the very simple questions.