We take a look at the journey of how prepaid funeral plans work. Starting from the moment you buy to when the plan is redeemed by your loved ones.

Who is this guide for? 

  • Those curious about how a prepaid funeral plan works
  • Anybody looking for assurances around how the delivery of the funeral they have purchased is protected
  • Anyone considering planning and paying their own funeral or for someone else 

Reading time:

 5 mins

How do prepaid funeral plans work?

Here's an overview of how prepaid funeral plans work.  For a more detailed description, click here.

  • Firstly, you buy a funeral fixed at today's prices. You can buy the funeral plan for yourself or for someone else.  In some cases you can buy a funeral plan in joint names, which pays for one funeral. Typically, the joint plan holder gets to decide whether this is for the first or second death (see the plan provider's terms).
  • Then, when the funeral is needed,  a single phone call is made to the funeral plan provider or funeral director as detailed in the funeral plan documents.  
  • Additionally, the funeral plan provider applies for the funds to pay for your funeral to be released from the trust or insurance arrangement.  This is where your funeral plan money was placed when you took out the funeral plan. (In accordance with legislation: Financial Conduct Authority (FCA) -  Financial Services & Markets Act 2000).
  • Lastly, the appointed funeral director takes care of all your carefully planned funeral arrangements. 

Please ensure you read your plan provider's terms carefully before you buy.

Lifecycle of a funeral plan - Infographic

How do prepaid funeral plans work when you buy from a Funeral Planning Authority registered member?

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

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

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

Finally, you will pay the funeral plan provider either in a single lump sum or in monthly instalments. Also the is no charge for spreading the payments over 12 months which can help spread the cost.  Alternatively, you pay a lower fixed monthly amount for life or until you reach a specified age (usually age 90).  

Average UK funeral cost in 2021

Basic funeral       £4,184
Includes the funeral director's fees and the average cremation and burial fee.

Comparable basic prepaid funeral plan   £3,946
Includes the funeral director's fees and the average cremation and burial fee.

(1) Cost and definition of 'Basic' funeral as referred to in the 2021 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.  Price includes the necessary third-party cremation or burial fees.

2.  Your funeral director is appointed

Usually, when you purchase a plan from a funeral plan provider registered with the FPA, the funeral director is appointed at the time you take out your funeral plan.  It's also good to note that the contract to deliver the funeral at the agreed price is legally binding.

Furthermore, all funeral plans compared on Before You Go ensure that should you move home, your funeral plan will be transferred to another local funeral director. 

3.  Your funeral money is put in trust or used to buy a life insurance policy

Your money is ring-fenced in a trust or insurance backed arrangement

To remain compliant with the Financial Conduct Authority (FCA) exemption rules*. The funeral plan provider must set aside the money to pay for your funeral into a whole of life insurance policy or trust which meets certain conditions. With the funds being released to pay the funeral director at the time of your funeral.

Also any fee that the funeral provider deducts from the amount you pay for your funeral plan. ( For example for administering the plan), does not affect the funeral service being provided.  As your funeral plan is a legally binding contract.  

*Financial Services & Markets Act (Regulated Activities) Order 2001 (RAO). https://www.legislation.gov.uk/uksi/2001/544/article/60

4.  You receive your funeral pack within 30 days

You will receive your funeral pack from the funeral plan provider within 30 days from your application being processed.  The pack will confirm the content of your plan.  

Following this a second pack will be provided.  Which you should pass this on to the person you trust. (Your "representative",  e.g. next of kin or executor of your Will), who will oversee the funeral arrangements.  The pack will contain instructions on what they need to do when your funeral is needed.

Lastly, the funeral plan will cover the broader elements of your funeral, such as whether there will be a funeral ceremony, the standard of coffin etc.  For the finer detail, consider writing your funeral wishes down in this free Funeral Wishes Planner. We would advise leaving a copy in the funeral pack for your representative to pass on to your funeral director.  You can get your free copy of the Funeral Wishes Planner, by clicking the button below.

Funeral Wishes Planner pages

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

If you change your mind after you've bought your funeral plan, you have between 28 and 30 days in which to cancel for a full refund.  However, if you cancel after this time, you may  receive a refund minus a cancellation fee, or in some cases you may lose the money you have paid to date entirely.  

This is because terms vary between plan providers.  So check the plan provider's terms and conditions before you buy to ensure you are fully aware of the implications if you should want to cancel.

Good to know

If you die before all payments have been made, your loved ones will have to pay the balance unless the funeral plan carries a 'price promise'.  In this instance, the plan provider promises to pay your funeral after 12 or 24 months of consecutive instalments.  If loved ones are unwilling to pay the balance, the payments are typically returned less a cancellation fee.

6.  How do prepaid funeral plans work when you need to activate them?

In the event that the funeral plan needs activating, your representative calls the number in the pack, which will either go through to the appointed funeral director or the plan provider. They will take care of the funeral arrangements from that point.

However, if the plan did not include full cover or an allowance towards the third-party cremation or burial fees, these would need to be paid from your Estate or by your personal representative before the funeral can go ahead.

Finally, it is important to understand that a funeral plan is not an investment with a financial return.  Instead, the plan delivers the funeral service.

Funeral extras

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. 

Get your FREE 
Funeral Wishes Planner

(No funeral plan purchase necessary)

Don't leave loved ones to worry about the detail of your funeral.  Leave clear instructions in this FREEand simple 
Funeral Wishes Planner

Haven't got a printer?  Send an S.A.E. to Before You Go.  Click for address.

About the author 

Kim Bird

Kim, the founder of Before You Go, is a funeral cost expert and regularly appears in the press, on TV and on radio. She began campaigning for greater funeral price transparency over 10 years ago. Kim is a member of Parliamentary Groups for funerals and bereavement.

In 2017, Kim was included in the Maserati 100 & The Sunday Times list of top 100 UK entrepreneurs for having a positive impact on society and her industry.

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