The problems and solutions to buying a prepaid funeral plan
All, Funeral planning, Money

What are the downsides to a prepaid funeral plan?

If you are considering buying a prepaid funeral plan and have done your research online, you may have come across some discussion around problems bereaved families have experienced with the funeral plan when it has been activated. 

The purpose of this article is to address, with complete transparency, the three most common prepaid funeral plan issues. We will also look at the causes of those problems and how you can avoid them.

Who is this guide for? 

  • Anyone considering purchasing a prepaid funeral plan
  • Anyone concerned about issues they have read online about  funeral plans 
  • Anyone who wants a safe way to plan and pay for their funeral in advance

Reading time:

 6.5 mins


The truth about prepaid funeral plans problems

At Before You Go, we are passionate about the benefits of funeral plans.  We have first-hand knowledge of arranging funerals at people’s time of need and have seen the financial and emotional difficulties families face when the funeral isn’t planned.  That’s why we’ve made it our mission to be the best impartial funeral plan comparison website and educator of prepaid funeral plans in the UK.

Before You Go Compare - on a mission to be the best educator of funeral plans

As we delve into the problems people have experienced with funeral plans, in the spirit of complete transparency, we would like to stress these ‘problems’ are both rare and often completely avoidable.

What do we mean by ‘rare’?

The Competition & Markets Authority report 2020 commented that the Funeral Planning Authority dealt with “a small proportion” (0.02% to be precise) of all financial product complaints resolved by the Financial Ombudsman Scheme (FOS) that same year.* 

We want to share this information with you in the hope you and your family will never end up experiencing the same difficulties and problems.

*  Source:  Gov.uk  - CMA Funeral Plans Impact Assessment

The 3 most common funeral plan problems and solutions

  1. 1
    The funeral plan didn’t cover the cost of the funeral 
  2. 2
    The funeral plan didn’t cover the cost of the funeral extras 
  3. 3
    More money was paid into the funeral plan than the funeral plan eventually cost! 

Problem 1:  
The funeral plan didn’t cover the cost of the funeral

It’s important to understand that a prepaid funeral plan is made up of two parts:

1.  the funeral directors fees; and
2.  the third-party fees (also known as “disbursements”), e.g. the burial or cremation fees. 

A prepaid funeral plan guarantees to cover the cost of the funeral director’s service, no matter how much these costs may rise in the future. 

Costs for third-party services are outside the funeral director’s control.  They aren’t included in all funeral plans.

What’s included in the funeral director’s service?

  • Professional fees for arranging and liaising with all parties 
  • Bringing the deceased into care 
  • Care of the deceased until the funeral
  • Optional viewing of the deceased *
  • Optional Embalming *
  • Transfer to the crematorium or place of burial in a hearse or suitable vehicle
  • Supply of family cars * 
  • Coffin 
  • Necessary staff on the day 
  • Extras, e.g. 'Thank you' cards *
  • Bereavement support *  
  • * Available with some funeral plans  

What are the common issues?

1

Miscommunication
The details of what is and is not included in the funeral plan have not been correctly communicated by the seller. This could happen unintentionally – by an inexperienced staff member.

2

Mis-sold
The seller is acting on behalf of one plan provider that pays them the highest fee.

3

Lack of knowledge
The buyer has little or no experience of arranging a funeral and it's not evident what elements may be missing from the plan that they had assumed would be covered.

4

Not sharing the detail
The buyer has missed the crucial step of sharing the funeral plan details and the fact that there will or may be some additional costs to pay at the time the funeral is needed.

Why don’t funeral plan providers include third-party cremation or burial fees as standard?

The reason why some funeral plan providers choose not to include third-party cremation cover, and most funeral providers choose not to include burial cover, is that these fees differ so widely throughout the UK.  

A UK-wide funeral plan price could unfairly penalise people in areas where these cremation or burial fees are lower.  It would also make the core principal of a funeral plan (i.e. to cover the funeral director's fees) too pricey.  

To make funeral plans affordable, funeral providers offer three types of plans that will pay all, some, or none of the third-party fees.  Otherwise known as "Guaranteed", "Contribution" and "No contribution" funeral plans.

Third-party fees example (2020)

UK Cremation:
Beckenham crematorium  £1,070
Belfast crematorium  £392
Difference: £678

UK Burial:
Kensal Green cemetery  £1,550
Belfast cemetery charges £608
Difference: £942

Source: Cremation Society – Jan 2020

How much?

What’s the solution to ensuring the funeral plan covers the full cost of the funeral?

Buy a 'Guaranteed' plan.

If you want to ensure the funeral director's fess and the third-party cremation or burial costs are covered, you will need a ‘Guaranteed’ funeral plan.

You should be aware that some cremation plans don’t always include the doctors’ cremation certification fees, because they aren’t always needed – it depends on the circumstances surrounding the death. (Doctors’ fees aren’t applicable in Scotland).

If you can’t afford a ‘Guaranteed’ funeral plan, your next best option would be a ‘Contribution’ plan.

Buy a 'Contribution' plan

A ‘Contribution’ plan sets aside an amount for the third-party cremation or burial costs. The amount grows, typically in line with Consumer Price Index (CPI),  until the funeral.

Each funeral plan provider sets their own level of UK-wide contribution.  This is the amount they feel would most likely cover the cremation or burial costs at the time the funeral is needed. Any shortfall would need to be paid from your estate or by your next of kin at the time of your funeral.

If you live in an area where cremation or burial costs are particularly high, depending on the plan you buy, you may be able to top up the contribution amount. and this may provide a better rate of return than putting money aside in a regular savings account. (Please note, this does not constitute financial advice).

'Price promise' plans

Another option would be to consider a funeral plan that promises to pay the full benefit of the funeral plan once a certain number of repayments have been made, e.g. 12+ months.

If you die before the qualifying period, and (for some plans) the death is not accidental, the balance of the funeral plan would need to be paid from your estate or by your personal representative.

Bear in mind, if you do end up paying the plan in full, the cost of the ‘price promise’ funeral plan could be more expensive than a plan without a price promise.

Have the conversation

Whichever funeral plan you settle on, make sure you give your family or representative a copy of your funeral plan pack and let them know if they can expect to pay a balance at the time of the funeral. 

Problem:     Cost of funeral plan doesn’t cover the cost of the funeral.

Solution:     Buy a guaranteed plan. Alternatively, consider a contribution funeral plan or a plan with a price promise. Let your family know the type of plan you have bought and if they can expect to pay some or all of the third-party cremation or burial costs at the time of the funeral.


Problem 2:  
The funeral plan didn’t cover the cost of the third-party funeral ‘extras’

Third-party funeral ‘extras’ are the non-essential items often bought at the time of arranging a funeral, e.g. floral tributes, order of service stationery and funeral notices.

The majority of extras aren’t normally included in set funeral plans, because not everyone wants them.  To include them would push up the price of the funeral plan.   Extras you may find included are the scattering of cremated remains and a set of thank you cards.

What is the common issue?

A problem occurs when the funeral plan buyer assumes third-party extras  are included in a funeral plan.

What’s the solution to covering third-party funeral 'extras'?

Depending on the funeral plan you choose you may be able to add a contribution to your plan towards the cost of the extras. You choose the amount you would like to add to the plan to cover these costs, or your funeral plan advisor can guide you.

The contribution will grow in line with the Consumer Price Index (CPI) or in some other way,  until the funeral is needed. If there’s a shortfall, the balance will need to be paid at the time of the funeral to the funeral director from your estate or by your representative.

Problem:     The funeral plan didn’t cover the cost of the third-party funeral ‘extras’.

Solution:     Pay a contribution towards the extras.


Problem 3:  
More money was paid into the funeral plan than the funeral plan eventually cost!

If you paid for your plan through the lower Fixed Monthly Payment (FMP) option (i.e. payments up to age 90 or for life), depending on when you took out the funeral plan and when you die, you might end up paying more into the plan than the value of the funeral when it’s needed.

What’s the solution to not paying more into a Fixed Monthly Payment funeral plan than the funeral is worth?

Look for a funeral plan that includes a rebate on the overpayment.

The overpayment amount is the difference between the total amount you have paid into the plan and the sum paid out to the plan provider to fund your funeral. If the plan is deemed to be in a state of overpayment, your estate will be eligible for a rebate of the overpayment of up to 100%. The amount will depend on the type of plan and age of the plan holder at the time the policy is taken out and the date of death.

Golden Leaves is currently the only funeral plan provider to offer an Overpayment Rebate Promise. Terms apply.

Problem:     More money was paid into the plan than it paid out to the funeral director.

Solution:     If you're going to pay for your funeral plan with the Fixed Monthly Payments (FMP) option, consider buying a plan that includes an Overpayment Rebate Promise.


Useful information

What is a set funeral plan?

A set funeral plan is a package of all the funeral director’s services you would need. Amendments to a set plan can often be made at the time of taking out the plan or at the time of the funeral. 

Read More
compare apples with apples
All, Funeral planning, Money

How to choose the right funeral director when planning in advance

The two most common factors for people choosing their funeral director are the overall expense and the quality of the goods and services provided.  


When funeral planning,  how do you choose the right funeral director in advance when these factor of cost and service are ever-changing and could be wildly different by the time your funeral is needed?

This guide includes information about the cost of a UK funeral today, what the cost might look like in the future, and some quality assurance considerations when choosing a funeral director in advance of the event.

Who is this guide for?

  • Anyone thinking about using a funeral director and how to make the right choice
  • Anyone who wants to understand the typical cost of a funeral today in the UK
  • Anyone looking to lessen the impact of rises in cost of a future funeral

Reading time:

 2.5mins


Do I need to choose a funeral director when planning in advance?

When you're planning the details of your funeral, you may want to specify a particular funeral director.  Don't have anyone in mind? That's okay. You don't need to choose a funeral director. 

The important thing is that you don’t let your indecision stop you from cracking on with your plans.  Your thoughtful decision to plan ahead can help loved ones avoid the added emotional and financial strain often experienced by bereaved families when having to make the arrangements at the time the funeral is needed.

You don’t have to use a funeral director by the way. Your family can organise the funeral with or without the help of a funeral director or the help of a home funeral arranger.

If you do want to choose the funeral director and are unsure how to select the right one, we've got some key pointers to help you. 

2 things to bear in mind before choosing your funeral director when planning your funeral in advance

Life is unpredictable

Your choice of funeral director today may not have the same reputation, belong to the same independent company or group, or even be around when you finally need them.  

It’s also possible you might move to another part of the country in the future – in which case you will need to choose funeral director. 

Money matters

If the cost of your funeral is going to be a consideration for you or your family, you need to get a feel for the funeral director’s fees before you make your final choice - even though it could be some time before their service is needed.  Do your research.  Ask for a copy of their price lists or go online. 

What most people don't know about funeral costs

Local funeral director’s fees can vary 

by more than 50%,
for the same service,
for the same standard of service, 
even in the same high street.

Funeral costs have risen well in excess of general inflation and are set to continue in this way.  

The cost of a basic funeral today is £4,184.  The total cost of dying is £9,263 - which includes the extras such as flowers, funeral notices, the reception after the funeral and legal fees.   Funeral costs are expected to rise a further 20.6% to £5,044 by 2025.

What you can do to help your loved ones avoid the rise in funeral costs

To avoid needlessly wasting money - due to the continuing above-inflation rise in funeral costs - that's better left in your estate for your beneficiaries, you can set money aside.  

You could consider putting money into a savings account, buying a life insurance or Over 50s policy, or a prepaid funeral plan.  What makes a funeral plan different, is that it fixes the funeral cost at today’s prices and guarantees to pay for your funeral regardless of how much the cost may rise in the future. 

3 key pieces of advice to help you choose the right funeral director when planning in advance

Look for a mark of service quality

Anyone can set up as a funeral director.

Consider choosing a funeral director who belongs to a funeral trade association or certified in some other way for assured quality of service.  In the UK, there are two UK funeral trade associations. Registered members must abide by a strict Code of Practice. They are:

Society of Allied & Independent Funeral Directors Independent (SAIF)
Includes independent funeral director members only

National Association of Funeral Directors (NAFD)
Includes independent and chain funeral director members

Both associations monitor their members’ compliance with a Code of Practice.  This includes a premises inspection and interviews with key personnel. 

Get a recommendation

Ask friends and family for their experience.  

Check online reviews

Back up word of mouth recommendation with ratings and comments on review sites.  To make sure the reviews are impartial,  honest and genuine, here are some things to look out for.

  • Ensure the review site is independent of the funeral industry
    One obvious telltale sign that the review site is tied to a funeral company or the funeral industry, is when the review site only reviews funeral directors and related services, such as Wills. 
  • Scan the rating scores
    If the review site predominantly shows 5-star reviews, ask the site to confirm how the reviews are collected.  Bear in mind that if the funeral director invites the reviewer, it’s all too easy for only happy clients to be asked to leave a comment.
  • Check the rating is for the funeral service only
    Another thing to watch out for on review sites is ‘merged’ reviews.  This is where a single rating is shown, but is for different services and products e.g.  funeral plans, wills, estate administration.  Get in touch with the review site if in doubt.

Can I choose my preferred funeral director when I buy a prepaid funeral plan?

Most plan providers will allow you to nominate your preferred funeral director, but it will depend on the type of funeral plan you buy.  It will also depend on whether your preferred funeral director agrees to take on the plan.

If the funeral director declines to take on your funeral plan, the plan provider will find a worthy replacement (the plan provider's reputation depends on it!) and put forward another funeral director for your consideration.   If you don't approve, keep asking your provider to find another funeral director until you are happy.

Useful RESOURCES

Funeral trade association
Members: Group and independent funeral directors
National Association of Funeral Directors

Funeral trade association
Members: Independents funeral directors only
Society of Allied & Independent Funeral Directors

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All, Funeral planning, Money

Are prepaid funeral plans a good idea?

During your lifetime you’ve given emotional support to your loved ones and financial support too when you can.  

Choosing to prepay your funeral now provides that same support for those you leave behind, at a time when they need it most.   You and your loved ones will have peace of mind knowing that they are protected from the worry and ever-increasing expense, and from organising your funeral at an already difficult time. 

Who is this guide for? 

  • Anyone curious about how a prepaid funeral plan works
  • Anyone who wants to protect their loved ones from rising funerals costs and the emotional upset of organising the funeral
  • Anyone considering planning their own funeral or for someone else 

Reading time:

 5 mins


How does a prepaid funeral plan work?

When the funeral is needed, a single phone call will release the funeral plan monies to the appointed funeral director, who will take care of all your carefully planned funeral arrangements.  

Before we go through the steps in a little more detail that lead up to buying and redeeming a plan, here's an overview of the prepaid funeral plan buying lifecycle.

Buying lifecycle of a funeral plan - Infographic

1.  The funeral cost is fixed at today's prices

green underline

When you buy a prepaid funeral plan (for your or someone else), you are paying the cost of the funeral director's fees up-front, fixed at today's prices. This protects loved ones against future price rises, which have historically risen way beyond inflation since records began in 2004. 

As well as prepaying the funeral director's fees, you can also choose a funeral plan that includes all or some of the necessary third-party cremation or burial fees. 

You pay the funeral plan provider direct - either in a single lump sum or in monthly instalments. Instalments up to 12 months are interest-free.  

Average UK funeral cost in 2021

Basic funeral       £4,417
Includes the funeral director's fees and the average cremation and burial fee.

Comparable basic prepaid funeral plan   £3,961
Includes the funeral director's fees and the average cremation and burial fee.


Sources:  
(1) Cost and definition of 'Basic' funeral as referred to in the 2020 SunLife Cost of Dying Research report.  
(2) The average price of a 'Traditional' type funeral plan (comparable with the SunLife 'Basic' definition) from a Funeral Planning Authority registered provider listed on Before You Go Compare.  Price includes the necessary third-party cremation or burial fees.

2.  Your funeral director is appointed

When you purchase a plan from a funeral plan provider, a condition of registered Funeral Planning Authority members is that the funeral director (or plan provider)  is appointed at the time you take out your plan.  The contract to deliver the funeral at the agreed price is legally binding.

3.  Your funeral money is ring-fenced 

To comply with the Financial Conduct Authority (FCA) rules*, the funeral plan provider must set aside the money to pay for your funeral in a whole of life insurance policy or trust, which is kept separate from the plan provider. The funds will be released to pay the funeral director at the time of your funeral.

Any administration fee that the funeral provider deducts from the amount you pay does not affect the funeral service to be provided.  Your funeral plan is a legally binding contract.  The funeral you buy is the funeral you get.

*Financial Services and Markets Act 2000 (Regulated Activities) Order 2001

4.  You receive your funeral pack within 30 days

The plan provider will send out your funeral pack within 30 days.  

The pack will confirm the content of your plan.  A second pack will be provided which you should pass on to someone you trust (your "representative",  e.g. next of kin or executor of your will), to oversee the funeral arrangements.  It will contain instructions on what they need to do when you die.

5.  Get 100% refund if you change your mind within 28 - 30 days

If you change your mind after you have bought your funeral plan, you have up to 30 days in which to cancel for a no-quibble full refund.  If you cancel after this time, you may be required to pay a cancellation fee.  Check the plan provider's terms and conditions for details.

6.  Your representative makes one call when the funeral is needed

Your next of kin calls the number in the pack which will either go through to the appointed funeral director or the plan provider. The funeral arrangements will then begin.

Depending on the terms of the plan and how you pay for it (i.e. in instalments or fixed monthly payments), extra services can often be added to the plan during the lifetime of the plan or at the time of the funeral arrangement. 

Funeral extras

Depending on the terms of the plan and how you pay for it (i.e. single payment, in instalments or fixed monthly payments), extra services - such as family cars -  can be added during the lifetime of the plan or at the time of the funeral arrangement. 

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