Are funeral plans a con?

It is important to fully understand what a funeral plan offers before jumping to the wrong conclusion when asking the question: ‘Are funeral plans a con?’.

With every choice a person makes, there are pros and cons that should be identified and reviewed carefully before deciding on something as important as a person’s final arrangements, and one question that may be asked is ‘Are funeral plans a con?

The kind of person that likes to have everything in place with the details confirmed in advance, is unlikely  to ask are funeral plans a con because they like to have everything relating to their final wishes and arrangements guaranteed including the finer details of the funeral itself and the price that they will pay in order to satisfy their final wishes.

Anyone that prefers this guarantee have options.  They can pre-plan their funeral, fixing the price of the funeral within their own budget, leading to peace of mind that everything is in place and the price is fixed for the pre-paid funeral plan they choose.

If a family member of a deceased loved one wonders are funeral plans a con they may feel quite grateful that their deceased loved one did opt for a pre-paid funeral before their death so that they are not left with the financial burden that funeral arrangements often bring.

When setting up a funeral plan, it can be done so that instalments can be made through regular payments to pay for the funeral plan that a person chooses.  Alternatively, it can be paid in one lump-sum, which provides complete reassurance to the person who sets us the pre-paid funeral plan that there will be no further costs to pay upon their death by their next of kin or family.

When considering are funeral plans a con, it is worth noting that there are a number of advantages of setting up a pre-paid funeral plan and that may include all or one of the following points:-

  • There is a variety of options of different funeral plans, with different levels of service, in order to meet a wide range of financial budgets.
  • The deceased’s loved ones or next of kin do not have to find the money, including any inheritance money left to them by their lost loved one, to pay for their deceased loved one’s funeral because it has already been paid.
  • Inheritance tax is reduced because funeral plans are considered as an investment; and it therefore reduces the likelihood of a person’s estate exceeding the deemed threshold that triggers inheritance tax.
  • The avoidance of inflation of funeral costs that continue to rise considerably year on year.
  • The reassurance that the money spent on a pre-paid funeral plan is protected and safeguarded by the Funeral Planning Authority (FPA) when using a regulated provider to pre-plan their funeral.
  • The ability of pre-planning a funeral with the precise details as a person wishes provides them with the reassurance that everything that they choose will be implemented upon their death so they have full control of what takes place.

Whilst a number of advantages of funeral plans are listed above, are funeral plans a con can be asked when identifying and reviewing the disadvantages that some people see in funeral plans and can be summarised as:-

  • The lack of financial stability a person experiences may not allow them the opportunity for them to pre-pay for their funeral and therefore this may limit them in choosing to be able to plan their funeral in advance.
  • The exclusion of certain fees being paid out during the time a funeral is arranged, including some services relating to the funeral arrangements that are being chosen, might discourage a person to plan their funeral in advance.
  • Until the end of July 2022, there is a number of funeral plan providers that are unregulated and although financial protection is covered by the FPA, a lack of trust might well be felt by a person looking to purchase a funeral plan in advance.
  • Although the cost of funerals has been proven to have risen over the last decade there is a chance that, in the future, the cost of funerals may reduce and therefore the money a person lays out on a pre-paid funeral will not be recovered.
  • Should a person who has taken out a pre-paid funeral plan and started to pay regular monthly instalments but dies before the plan has been fully paid for, the family or next of kin of the deceased will have to meet the difference in cost to the funeral plan chosen.
  • Funeral plans are considered to be long term investments and there are a number of funeral plans that include terms that stipulate that the plan may not be honoured if a person that has taken out the policy dies within a certain period (one or two years) of the funeral plan policy being put in place.

Ensuring that a person is not caught out to find are funeral plans a con anyone that looks to pre-pay for their funeral, they should carry out research and make sure that their funeral plan provider they use is regulated, in which a strict code of practice is followed and adhered to.

If a person follows the main rule of ensuring their funeral plan is placed with a regulated funeral plan provider, they are less likely to ask are funeral plans a con because their money is safeguarded in that a person’s money is placed in a safe trust so that, should the funeral plan provider fail, the money will automatically be transferred to a new funeral plan provider or be refunded back into the deceased person’s estate.

The next article will be published next week, and the title will be What are the best funeral plans in the UK?