A funeral plan is a way of paying for a future funeral today. It is not an investment plan as you are effectively paying for a service in advance rather than seeking to earn a return on your investment. Here are some things to bear in mind if you’re thinking of taking one out.
- Why use a funeral plan?
- How do they work?
- How secure is my money?
- Questions to ask the plan provider and your adviser
- Next steps
- More information about funerals
Why use a funeral plan?
Funerals can be expensive, costing perhaps several thousand pounds, and many people worry that when they die, they won’t leave enough money for their funeral. With a funeral plan, you arrange and pay for it in advance.
You can arrange a funeral plan for your own funeral or for someone else’s, as long as the funeral will be held in the UK.
But a pre-paid funeral plan is not the only way to pay for a funeral. There are other options and ways to save on the cost of funerals.
How do they work?
You pay either a lump sum or instalments to the plan provider, or to a funeral director. Your money is either invested:
- Into a trust fund with trustees, or
- In an insurance policy, which is then used to pay for the funeral whenever that turns out to be.
The aim of both methods is to safeguard your money until it’s needed, ensuring that it’s used to provide the funeral you have paid for.
How secure is my money?
The Financial Conduct Authority (FCA) doesn’t regulate funeral plans covered by insurance or trust arrangements. It does however stipulate rules for each method of investment, so sums paid by the customer are safeguarded and available to pay for the funeral when needed.
If you’re paying for your funeral bill upfront, you could consider paying for part of on your credit card. When you pay with your credit card, you benefit from Section 75 of the Consumer Credit Act. This means you can get extra protection if things go wrong with the funeral director.
You could also get this protection if you were to pay at least £100 of the funeral bill upfront, and then pay off the rest of the balance in monthly instalments.
Questions to ask the plan provider and your adviser
- What exactly is included in the plan and what potential costs are not?
- Could there be any other expenses for the funeral, and what happens if there are?
- Is it possible to cancel the plan if circumstances change, for example if you’ve arranged for your spouse’s funeral but you later separate?
- Are there any cancellation charges?
- Does the plan allow you to choose the funeral director?
- What if your chosen funeral director goes out of business?
- What happens if the person the funeral is intended for dies abroad or away from home?
- Can the funeral director arrange a funeral of a different standard from the one you have chosen?
- If you pay by instalments, how long do you do this for and do you have to pay interest?
- What happens if there are outstanding instalments at death?
- What freedom do you have to change the details of your funeral plan?
- How does the funeral planning company know about the plan holder’s death?
For more information about funeral plans, costs and help figuring out if you need one, visit the Which? website.
If you take out a funeral plan then:
- Make sure you have a written record of the arrangements and keep it safe. You should receive a plan confirmation.
- Make sure your next of kin knows you have already paid for your funeral and what the details are.
- Check to see that the plan provider has a clear complaints procedure.
More information about funerals
Using the links below, you can find more general information about funerals – for example the different options available, choosing a funeral director, rights, choices and help with costs. The sources of information differ depending on where you live.
- for England and Wales - visit GOV.UK
- for Northern Ireland - visit nidirect
- for Scotland - visit the Scottish Government website