It’s not an easy task to think about planning your own funeral or the funeral of someone you love. But taking the time to make funeral arrangements in advance has several advantages.
One of the best ways to do this is by setting up a funeral plan. This is an arrangement you make with a funeral services company whereby you organise all of the details of your or a loved one’s funeral in advance, and pay for it upfront. You can generally opt to pay all at once, or in regular instalments.
However, you might be wondering if it’s really worth paying now for something you won’t even be around to see. If you’re not convinced, here are eight benefits of taking out a funeral plan that you might not have considered.
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- You can secure a price and avoid rising costs
- You can choose what happens
- You can specify the kind of funeral you want
- It takes some stress away from your loved ones
- You can plan on someone else’s behalf
- They are comprehensive and clearly priced
- Your money is protected
- Funeral plans don’t count towards Inheritance Tax
1. You can secure a price and avoid rising costs
As with any kind of product or service, the cost of an average funeral has gone up and down over the years.
The most recent Cost of Dying report from SunLife shows that the average cost of a basic funeral has reduced year-on-year, fallinging 2.5% to £3,953 between 2021 and 2022. But this still represents an increase of 45% over the decade, and costs are expected to rise overall going forwards.
The good thing about buying a funeral plan is that you secure a price at the time you pay, meaning that if funeral costs have gone up by the time you die, you will have made a saving overall for your estate.
For example, if someone took out a prepaid basic funeral plan at the average price in 2011 and died in the past year, they would have saved nearly £700 on funeral costs.
2. You can choose what happens
You might have never really thought about it before, but deciding what you want to happen to you when you die is a big decision, and for most of us, a very personal one.
For example, would you prefer to be cremated and have your ashes kept, or perhaps you’d like them scattered somewhere with significance to your life?
There are lots of other factors that can come into play here too. For example, cremation tends to be cheaper than a burial, or you might have certain spiritual or religious beliefs that guide you a particular way.
By arranging a funeral plan, you can specify exactly how you want your body to be treated when you die, so that your wishes are fully respected.
If you aren’t sure about what you want to happen to your body and need some help deciding, our article How to choose between burial and cremation can help you make an informed decision.
3. You can specify the kind of funeral you want
For many people, having some control over what their funeral will be like is very important. In many ways, a funeral service is a celebration of your life, so you may want to make certain requests to ensure it reflects your preferences and the way you want to be remembered.
A funeral plan allows you to do just that, and pick out everything about your funeral in advance. This of course includes things like where it is held, the nature of the service, any special readings or speeches and so on. It also covers details like decorations, music, and dress code, so you can plan your ideal service to a T.
4. It takes some stress away from your loved ones
It’s never easy to cope with the loss of a loved one, and the financial and logistical pressure of arranging a funeral can be very stressful at what is already a difficult time.
By taking out a funeral plan, you are essentially relieving your loved ones of this stress, by not only handling the cost but also making sure everything is planned in advance, leaving them with more breathing room to grieve.
5. You can plan on someone else’s behalf
Funeral plans don’t have to be made for yourself. If you have someone in your life who you would like to plan a funeral for who either doesn’t want to or is unable to do it themselves, you are able to take out a plan for them.
For example, if you have an elderly or sick relative who cannot make specifications themselves, you can complete a funeral plan so that everything is figured out in advance, and you won’t suddenly have to do it all at once when they die. Or, you and your partner may wish to set up plans for each other.
You have the choice whether to tell someone about the funeral arrangements you have made for them or not. If you think that talking about their funeral would cause them extra stress, you can always choose not to mention it.
6. They are comprehensive and clearly priced
Most funeral plans are designed to cover costs other than just the cremation or funeral itself.
This generally includes collection and transportation of the body, mortuary care, fees for cremation or burial, doctor’s certification, the costs of the service, and so on.
New regulations from the national regulatory body the Financial Conduct Authority (FCA) require that funeral plans always have transparent pricing. Providers are not allowed to mislead you about how much a plan is , for example, by saying it will cost a certain amount and then throwing in more and more fees for other features as you get further in the process. If a plan lists everything you want upfront for a certain price, then that’s exactly what you can expect to pay, with any extra costs clearly outlined.
7. Your money is protected
Funeral plans used to come with a considerable downside – they weren’t regulated. It used to be the case that if you bought a funeral plan and the company you bought it from went bust, there would be no guaranteed way of either getting your money back, or receiving the service you paid for.
However, since July 2022, all funeral plan providers are now authorised and regulated by the Financial Conduct Authority. If you take out a funeral plan, your money will now be protected under the Financial Services Compensation Scheme, meaning it can be refunded to you if the company fails.
8. Funeral plans don’t count towards Inheritance Tax
Even though funeral plans are an investment of sorts, they come with a major upside for Inheritance Tax (IHT) planning purposes – that is, they are not counted as part of your estate, meaning your next of kin do not have to pay Inheritance Tax on the cost of your funeral.
This is another way that taking out a funeral plan can hugely relieve any stress on your loved ones. Say you die without a funeral plan; you might have a certain amount of money in your estate set aside in a savings account for organising your funeral, but this will be diminished by IHT if the value of your estate is above the current £325,000 IHT threshold. Buying a funeral plan means this will not be the case.
You can read more about how Inheritance Tax works in our article What is Inheritance Tax?
Additionally, any funeral plans you have purchased are not factored into your assets if you apply for any means-tested benefits, such as Pension Credit.
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You might have heard of ‘funeral insurance’, which is a blanket term used to refer to either a funeral plan or a life insurance policy, either of which can be used to cover the cost of a funeral when you or a loved one die. You can learn more about this and which option might be best for you in our article What is funeral insurance?
If you want to learn more about the different ways to pay for a funeral and what type of support might be available to help you pay, you can read our article How to pay for a funeral.
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