What are the benefits of a prepaid funeral plan?

Consumer watchdog Which? suggest funeral costs could rise to £12,500 by 2020
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A prepaid funeral plan can protect your family from the shock cost and distress of arranging an 'at need' funeral. We take a look at why it is a product we should all consider.

Whoever you listen to the consensus is that funeral costs are rising. The latest Sun Life Cost of Dying survey, claims an average funeral costs £8,126 - this includes flowers, catering, and estate administration costs. While the Which? Dying Report estimates that by 2020 costs could rise by 53 per cent to around £12,500.

It's a cost that too few people consider until they absolutely need to. In early August, a group of friends from Droitwich undertook a sponsored walk to raise money for a friend's funeral costs after she was diagnosed with a terminal illness and given only six weeks to live. It's a sad story of a life curtailed but it illustrates how our health and circumstances can change overnight and why having a plan for the end of your life is so important.

What you get with most prepaid plans

There are many funeral plans on the market, and it pays to shop around. The most obvious benefit of a prepaid funeral is cost; you pay today's prices for a service you might use 20 years in the future. A prepaid plan guarantees to cover the required services for a cremation or provides a contribution towards burial costs. You can also detail your wishes for the service itself - any special readings, music or flowers you’d like. This type of product gives you full control of your funeral and the type of event you want it to be. You can add as much detail as you like and if circumstances change you can amend your wishes (provided they are within the plan) free of charge. 

Weigh up the different payment options available and choose the plan with terms and services that suit your needs. Providers of funeral plans worth exploring are Dignity, Sun Life, Perfect Choice and Co-operative Funerals.

Dignity is one of the UK's largest providers of this type of product with more than 698,000 people choosing to entrust their arrangements to the company. Among the benefits of buying one of their plans is that your arrangements are guaranteed by Dignity, not by an individual funeral director, so you don’t have to worry about the funeral director going out of business. Dignity prides itself on setting the highest standards for the funeral profession and has built its reputation through the excellence of its 700-plus funeral directors (with an additional 400 vetted and approved), many of whom have been working in their local communities for generations. Appreciation of the quality of this end-to-end link is reflected in Dignity's customer feedback, with 98%** of those surveyed being prepared to recommend their Funeral Director to friends and relatives. 

Prepaid plans of this type are relatively easy to set up and provide a stress-free way to choose the type of funeral that's right for you; from dealing with paperwork to organising the funeral event and arranging the type of transport required.

As with most providers, there are different levels of plan, depending on the type of funeral you choose. You can add special wishes, and if you change your mind or your circumstances vary, these can be amended. This service is available without cost on all three levels of Dignity prepaid plans. 

Making sure your money is safe

With most funeral plan providers, your money is held in an independent trust fund until needed, this guarantees that no matter what happens your money and funeral arrangements will be protected and honoured. 

When considering buying a prearranged funeral product, make sure the seller is also a member of the Funeral Planning Authority, the professional body that oversees the operation of registered funeral plan companies.

Ever-rising costs will necessitate that we all take a far keener interest in how we finance and arrange our end of life matters. A prepaid product - provided it's the right one for you - helps to guarantee that however much funeral costs may rise in the future, the cost you pay is frozen certainly takes the stress, worry and lump sum cost from your nearest and dearest.

Why take out a prepaid plan?

  • Protect against rising costs;
  • Have the funeral you want;
  • Avoid your loved ones having the cost and stress when you die.

Decide which plan suits your needs best:

  • How easy to apply;
  • What is covered: ie, Is a limousine required? What type of casket? are flowers included?
  • Flexibility to make it bespoke;
  • Trust in the reliability of the plan provider; 
  • Value for money;
  • Financial protection.

Application process:

  • Online;
  • By phone;
  • By post.

Payment:

  • Lump sum one-off payment;
  • Monthly instalments - the cost can be spread over 12 months at no extra cost;
  • Monthly instalments over set periods, usually up to 10 years (an additional charge is usually incurred on this type of payment plan).

Conclusion

It makes financial sense to buy a prepaid plan - you will save money by protecting against any potential rise in funeral costs for services included in the plan. We currently enjoy record low inflation in the UK, but funeral costs in 2015 increased by 3.9%*, compared to an annual inflation rate of 1.0%, as measured by the Retail Price Index (RPI).

If you cast your mind back to the first paragraph of this piece, that means that in the course of 12 months the average cost of a funeral (without a fixed-price, prepaid plan) has just risen to approximately £8,440.

Making provision for end of life should be seen as a natural and sensible step and the earlier we accept this and discuss the options open to us the better. Prepaid plans, if nothing else, can be a simple way of ensuring your loved ones are protected in the future against unexpected costs and the worry of planning a loved one's funeral.

*Rising Funeral Costs - Royal London 2015

**Dignity plc Annual Reports & Accounts 2015

Tags: Funeral Dignity Funerals Funeral Planning Authority Which? prepaid plan prepaid funeral Cost of Dying Report

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