Watch Out for Costly Funeral Plan Exclusions - Which? Report
All Golden Charter funeral plans, have always guaranteed that the funeral director costs will be covered irrespective of how the prices may rise in the future. Although the Which? article correctly states that a contribution towards third party costs or disbursements is included within Golden Charter plans, it incorrectly implies that there is no growth applied to this contribution. The same growth is in fact applied to the plan as a whole, and that includes the contribution to third party costs and historically, this growth has outperformed RPI.
Fully guaranteed plans; is there indeed such a product on offer at the moment?
Look at the terms and conditions of any guaranteed funeral plan and there will be terms and exceptions such as cremation must take place at certain crematoria usually chosen by the funeral director, doctor fees are paid up to a maximum of the British Medical Association recommendations and minister/officiant fees are paid up to the maximum recommendation of the Church of England and only for a service at the crematorium or burial ground.
All costs related to interment or disposal of ashes such as ash caskets, minister’s fees, local authority fees and even funeral director services to carry out these arrangements are not included, as the Cooperative’s terms and conditions for a guaranteed cremation plan explain.
Burials are indeed more expensive than cremation as a burial plot needs to be purchased from the local authority. This is something that no funeral plan provider can include in their plans as prices vary widely and if you wish to purchase a burial plot outside of your local authority’s area, the price is greatly increased. Incidentally, even if you have bought your burial plot, the interment fees are also greatly increased at your time of death if the plot is outside your local authority’s area and this increase in not covered by guaranteed burial plans.
Golden Charter does in fact offer plans for cremation which guarantee third party costs but they are subject to certain limits. These are very clearly defined in our terms and conditions which are supplied to anyone that requires this type of plan.
We would agree with Richard Lloyd, executive director at Which? that people should make sure they are fully aware of any exclusions that apply before investing money in a funeral plan. We would add that people should also look at what would occur if they decide to cancel before and after the cooling off period and what the cancellation charges are.
It is true that funeral plans are not regulated by the Financial Conduct Authority (FCA) and as such we recommend that when buying a funeral plan, to make sure that the funeral plan provider is registered with the Funeral Planning Authority (FPA) as providers registered with the FPA must adhere to a strict code of conduct and rules, one of which is to ensure that money received from a plan holder must either be placed in a trust which has been approved by the FPA independent compliance committee or for the funds to be applied towards a contract of whole of life insurance on the life of the plan holder with the funeral plan provider being the beneficiary.
In the unlikely event that Golden Charter would cease to exist, the Golden Charter Trust, a separate legal entity to Golden Charter the company, would continue to exist until every single plan held within the Trust is paid for at the time of need. The most recent full valuation of the Trust at current funeral values at the date of valuation was in excess of 110% of that deemed necessary.
For all plans where money has been placed in whole of life insurance, the money paid is protected through the Financial Services Compensation Scheme.