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Why is the price of a prepaid funeral plan sometimes cheaper than the funeral director’s standard price list – for the same service?


If you haven’t prepaid your funeral before you die, your family may discover, when they make the arrangements, that the purchase price of a funeral plan would work out cheaper than the funeral director's standard ‘at-need’ funeral price list – for exactly the same service. Alas, too late for all concerned.

We explain how that’s the case, and – knowing that – why you or your family can’t simply take advantage of the saving by purchasing your funeral plan in the days immediately before and at the funeral arrangement. Even so, once you understand how the system works, prepaid is still money saved.

Who is this guide for? 

  • Anyone curious about why the cost of a prepaid funeral plan is sometimes cheaper than the funeral director’s price list for the same service
  • Anyone wanting to know the average saving of a funeral plan vs an at-need funeral in 2020 
  • Anyone wanting to know why planning a funeral early is still the wisest move

Reading time:

 3.5 mins

Why can the purchase price of a prepaid funeral plan, around the time of the funeral, sometimes be cheaper than the at-need cost for the same standard of funeral? 

Before we answer that, here’s the source of our information, so you know it’s credible: 

Competition & Markets Authority (CMA): Funerals Market Investigation 2020. Appendix F: 5.153  

"[Prepaid funeral plans] are often sold at a lower price than at-need funerals."

Now, in order to solve this riddle, we need to look at some numbers.  Don’t worry, we’ll take it slowly! 

Here are the most common scenarios: 

  • Funeral costs vary hugely across the UK.  In 2020, London is still the most expensive place to die.  At an average cost of £5,693, a funeral held in England's capital costs 35% more than the average cost of a funeral elsewhere in the UK.  
  • What you need to understand is that the pricing of national funeral plans covers the average funeral expense – regardless of where you live.  If you reside in an area where funeral prices are high, and London is far from being the only pricing hotspot in the UK, you could be on to an immediate and long-term savings winner should you decide to prepay your funeral.   
  • Here’s how the average UK funeral cost compares with the average of a funeral plan (in 2020):
    A basic funeral = £4,417 (1)
    A comparable basic prepaid funeral plan = £3,961 (2)
    Cost saving = £456 (10%)
    Price includes the average funeral director's fees and necessary third-party fees for burial or cremation (including the two doctors’ cremation certification fees).
    (1) 'Basic' funeral as defined and referenced 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).
Some funeral plan providers own their network of funeral directors.  This may enable them to provide funeral plans at a lower price than at-need funerals because selling a prepaid funeral plan can secure future business for their funeral homes, and generate future customer loyalty. 
"Now that I know all this, why doesn't my family just buy a funeral plan at the time my funeral is needed instead of paying in advance?"
That is the big question, and the simple answer comes down to a single word: legislation. 

The Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 stipulates thatin regard to prepaid funeral plans:  

The person for whom the funeral is for, needs to be living at the date when the contract is entered into” and a funeral contract cannot be entered into if "at the time of entering the contract, the customer and the funeral plan provider intend or expect the funeral to occur within one month". 
There is one exception to the ‘intend’ or ‘expect’ rule, and that is if you died as a result of an accident.

So what does happen if I take out a funeral plan and then need my funeral within one month, but my death was not due to an accident? 

In that unhappy event, if your funeral plan was with a Funeral Planning Authority registered provider, the funeral plan money you have paid in will be refunded to your estate or your family could request that it is used to pay, or go towards, the nominated funeral director’s bill. Any balance due would need to be paid according to the funeral director’s standard price list.

Terms differ between providers. You should check these carefully when buying a plan, and especially if there are concerns that your life expectancy could invalidate the plan in the manner described above.

How you can help your family with the funeral arrangements and cost from beyond the grave?

There’s a well-known business acronym called the Five Ps: proper planning prevents poor performance. We have our own version that perfectly sums up our message to you: prepaid planning prevents posthumous poverty. pre-posthumous planning prevents payment poverty!

Let’s break that down a little to illustrate why prepaying and planning your funeral in advance is so important for those you leave behind.

  1. 1

    Your family won't feel pressured into paying more than they need to, when you die.  

    Arranging the funeral is often when the heart rules the head.  Typically, bereaved families "want the best" and then they worry about how they are going to pay for it afterwards.  If you've already paid for your funeral, you can still have the best and save your family unnecessary added expense.  
  2. 2
    Your family won't have to spend time shopping around for the best-value funeral.  
    Once your plan is in place, the funeral director or the funeral plan company itself has been nominated to carry out your funeral and is under contract to deliver it for the fixed amount agreed on the day the plan was purchased.  Your family won’t have the distress of hunting for a good deal at a time when they are already coping with their loss. 
  3. 3
    Your family will be saved from the expense of your funeral.
    The further in advance you plan, the more loved ones will save, as they will be avoiding the increases in funeral costs in the intervening years (see Rise in funeral costs). And, depending on your preferred payment plan, your funeral will all be covered by then. It’s something else they’ll remember you fondly for.
  4. 4
    Your family won't have the heartache frequently experienced when organising a funeral. 
    You will have sorted out the details, leaving them with fewer or possibly no decisions to make, which eliminates any worries about whether they've done right by you. 
  5. 5
    You will help your family avoid possible arguments and conflict. 
    Documenting what you want for your funeral gives loved ones clarity over the details.  Grief affects different people in different ways, but it always takes its toll.  Family members and close friends may have opposing views about who knew you best and how you’d want your funeral to go (and what should happen afterwards).  It is a no-win situation that can cause upset and division, which is the last thing you’d want as your legacy.   Documenting what you want, whether it’s in black and white, or on an audio / video recordingor giving named individuals your express permission to make those choices, removes any uncertainty. 
Whichever way you look at it, there’s no mystery about why a prepaid funeral plan is the answer! 

About the Author

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Sophie can usually be found reading a book. Writing a novel has always been on her bucket list. When not absorbed in the latest page-turner, Sophie likes to explore and gain a deeper understanding of peoples' attitudes towards end-of-life planning and how it impacts their lives. She hopes that in some small way her writing around these topics can make a positive difference to her readers.

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