Beware of expensive pre-paid funeral plans
Farewells are expensive, so many people opt for package deals. But they can be opaque and pricey, says Ruth Jackson-Kirby.
Anyone who has ever organised a funeral can tell you it usually costs more than you would expect. The average funeral costs £9,263 according to SunLife, a life insurer, but the total outlay varies depending on your choices. Coffins don’t usually come cheap, while fancy flowers and a burial plot can all rapidly increase the price.
To avoid spiralling costs and save relatives the hassle of deciding the details, more and more of us are opting for a pre-paid funeral plan. You design and buy your funeral in advance, locking in today’s prices. But many people may not be getting the funeral they think they have paid for.
“This is a strange scenario: the purchaser is not around when the plan comes into effect, to assess whether it meets promised standards and complain if it doesn’t,” says Faith Glasgow in The Financial Times. People often don’t discuss their funeral plans with family so, after their death, their relatives don’t know what was agreed.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
“We are currently dealing with a prepaid funeral where there is a lot of misunderstanding over what was included. The customers are under the impression the whole funeral was paid for, but we had agreed with the plan provider that the plan would cover only part of the costs,” one funeral director told the Financial Times. That family is facing an additional bill of £700.
One problem is commission, with will writers and funeral directors being offered hefty payments by third-party funeral plan firms if they can sign people up. Commissions can sometimes make up 50% of the cost of a plan.
The Financial Conduct Authority (FCA), the City regulator, will be stepping in to authorise and regulate the pre-paid funeral plan industry from July 2022. It has now announced how it plans to make the sector more transparent and fairer. From next summer firms will have to be authorised by the FCA to sell funeral plans and that will mean meeting strict rules on how they market their products. They “will be banned from cold-calling and from using additional fees to drive profits and commission payments to intermediaries”, says Kevin Peachey on the BBC.
Peace of mind
An added benefit of pre-paid funeral plans being regulated by the FCA is that from next July your money will be protected by the Financial Services Compensation Scheme (FSCS). So, if the company goes bust you can get your money back.
In the meantime, if you have a funeral plan, or are planning to get one, make sure someone you know understands how much you’ve paid and exactly what that covers. That way they can ensure you get what you paid for after your death. Also check exactly how the cost of your plan breaks down. How much are you paying for your funeral? How much will go on fees and commission?
“Keep the paperwork with other important documents so it is easy for your family to find,” says Peachey. And if you move house, tell your funeral-plan provider. “The cost may be different in the area you move to.”
Sign up to Money Morning
Our team, led by award winning editors, is dedicated to delivering you the top news, analysis, and guides to help you manage your money, grow your investments and build wealth.
Ruth Jackson-Kirby is a freelance personal finance journalist with 17 years’ experience, writing about everything from savings accounts and credit cards to pensions, property and pet insurance.
Ruth started her career at MoneyWeek after graduating with an MA from the University of St Andrews, and she continues to contribute regular articles to our personal finance section. After leaving MoneyWeek she went on to become deputy editor of Moneywise before becoming a freelance journalist.
Ruth writes regularly for national publications including The Sunday Times, The Times, The Mail on Sunday and Good Housekeeping, among many other titles both online and offline.
-
A junior ISA could turn your child’s pocket money into thousands of pounds
Persuading your child to put their pocket money in a junior ISA might be difficult, but the pennies could quickly grow into pounds – and teach them a valuable lesson about money
By Katie Williams Published
-
Cost of Christmas dinner jumps 6.5% as grocery price inflation rises again
The average Christmas dinner for four now costs £32.57 as grocery price inflation increases - but what does it mean for interest rates?
By Chris Newlands Published
-
Parents face £1,000 'nanny tax' – how to afford it
Hiring a nanny is about to become even more of an expensive hassle for families, especially those in London. Here's how to cut costs
By Ruth Jackson-Kirby Published
-
Is it cheaper to be a sole trader?
It might be cheaper to be a sole trader due to changes to the tax system
By David Prosser Published
-
The best fintech apps on the market
From digital banking to investment platforms, here are the top fintech apps on the market right now, according to David C. Stevenson
By David C. Stevenson Published
-
What pension providers don't tell you about your retirement money
Check the small print from your pension provider or risk losing thousands.
By Merryn Somerset Webb Published
-
Britain’s stifling tax burden
Chancellor Jeremy Hunt's Autumn Statement will see the tax burden rise in each of the next 5 years.
By Emily Hohler Published
-
Brace for a year of tax rises
The government is strapped for cash, so prepare for tax rises. But it’s unlikely to be able to squeeze much more out of us.
By Matthew Lynn Published
-
Lock in high yields on savings, before they disappear
As interest rates peak, time to lock in high yields on your savings, while they are still available.
By Ruth Jackson-Kirby Published
-
Are lifestyle funds still fit for purpose?
Lifestyle funds have failed to do what they were supposed to do – shield savers from risk in the run-up to retirement.
By David Prosser Published