Are funeral plans worth it?

Are funeral plans a good idea?

Whether a funeral plan is worth it depends on what matters most to you. For many people, the main benefits of funeral plans are recording their wishes and fixing the cost of the funeral director services included in the plan. But there are other things to check carefully, such as what is covered, how payments work, and whether third party costs are guaranteed.

With all these things to think about, it can be hard to make a final decision confidently. In this article, we’ll look at the benefits and things to be cautious of when funeral planning, as well as explaining how to spot a reliable provider. Being well informed makes it easier to make the choice that best suits you.

What does a funeral plan cover?

In the UK, funeral costs usually fall into three main parts. A funeral plan lets you arrange and pay in advance for some or all of these parts, depending on the type of plan you want.

Funeral director services:

• Making the practical funeral arrangements for you
• Help with administrative tasks and paperwork, like registering the death
• Caring for the deceased person until the funeral
• Providing a hearse and limousines
• Providing a coffin

Funeral plans usually guarantee to cover the cost of the funeral director services included in the plan, fixing them at today’s prices.

Third party costs:

• Cremation or burial fees
• Opening a new burial plot (if needed)
• The fees for the religious official, celebrant or humanist to lead the service

Third party costs are generally not guaranteed, because they are set by the provider (like the crematorium, cemetery or person who leads the service), not the funeral director.

While some funeral plans, including direct cremation plans, do cover third party costs, most plans include a contribution towards them, which means they could be partially instead of fully covered. Always check any plan for details about how third party costs are handled, so you can understand what is included and what might need to be paid at the time of the funeral.

Any other optional extras for the send-off:

• Flowers
• Orders of service
• Venue and catering costs for a wake
• Extra limousines

While the third party costs above are necessary practical parts of many people’s funerals, optional extras cover other personal touches that might go beyond what a funeral plan provides. Because the extras people want change from person to person, these are usually paid for separately at the time of the funeral. Some plans do let you add money towards specific extras, or so it’s always worth checking with a provider beforehand.

Once you know what a funeral plan covers, it’s easier to weigh up the possible benefits.

Advantages of pre-paid funeral plans: protecting your family from rising costs

With rising funeral costs consistently outpacing inflation, it’s difficult to know what to budget for in the future. A pre-paid funeral plan locks the funeral director services at today’s costs, which gives you strong financial protection against price increases for the future. It also means that your loved ones won’t have to scramble to find an average of £2,365 to cover unpaid costs, according to the latest research.

And whether a plan guarantees third party costs and optional send-off extras or simply contains a contribution, having a pre-paid funeral plan can also save money on these costs by making your wishes clear. Research shows that people who know even some of their deceased loved one’s wishes save an overage of £335 on send-off costs^*. With the deceased’s wishes clearly written down in a funeral plan, there’s no need for loved ones to guess whether they are spending money on things that weren’t wanted.

Advantages of pre-paid funeral plans: peace of mind for you and your loved ones

We’ve shown you how making your wishes known in a pre-paid funeral plan can save your family money, and there can also be emotional benefits. As well as clearly laying out a person’s wishes to avoid stressful guesswork, many funeral plans allow you to choose a funeral director - or to know which funeral director will be taking care of you and the funeral arrangements. With the wishes in place and organised in the background by the funeral director, loved ones can focus on grieving and supporting each other during a difficult time.

Things to be cautious of when considering pre-paid funeral plans

1. Payment plans – A pre-paid funeral plan can help protect against rising funeral costs, but it’s still worth checking how the payment side works. Some providers offer longer monthly instalment plans that include APR, which means you could pay more overall than the funeral plan is worth. Whether these plans make sense for you will depend on your own situation. Looking at the payment options available can help you find a funeral plan that feels manageable and right for you.

2. Third party costs – It’s important to understand what is guaranteed in a funeral plan, and what is not. Some plans, including some direct cremation plans, do guarantee third party costs in full, while a contribution will be enough for some people, so it’s always worth checking the details carefully with the funeral plan provider.

3. Lack of flexibility – Not every funeral plan offers the same level of choice. Some plans may limit your choice of funeral director, so if that matters to you, it’s important to check before buying. Other plans offer more flexibility, including the option to choose or state a preference for a funeral director. For example, Golden Charter works with over 3,000 independent funeral directors across the UK^*, meaning you can easily switch your local funeral director if you move.

How to choose a safe and reliable funeral plan provider

When choosing a funeral plan provider, it can help to look for a combination of experience, customer trust and protection. At Golden Charter, we have been helping people plan ahead for more than 35 years and have supported over one million people in putting plans in place^*.

If you choose an authorised funeral plan provider, your plan may also be protected by the Financial Services Compensation Scheme (FSCS). This scheme was set up to give customers compensation if a company fails. In this case, you could apply to have the money you paid returned, up to £85,000 per person, per firm. While funeral plans aren’t quite that expensive, it helps know that your money would be protected if anything unexpected happened.

Alternatives to a pre-paid funeral plan

1. Savings – Some people prefer to put money aside in a savings account to be used specifically to pay for funeral costs. The big difference is, while this would allow your loved ones more flexibility as to what they’d like included in the funeral, this doesn’t protect against rising funeral director costs.
2. Over 50s life insurance policies – These policies pay a fixed cash amount when someone passes away. This money can be used towards funeral costs, but the policy isn’t linked to a specific funeral director. It also doesn’t usually record your funeral wishes, so your family may still need to make those decisions themselves.
3. The estate – Some people expect funeral costs to be paid from their estate. This can work, but it may depend on how quickly the money can be accessed and whether there is a will in place, as the will’s executor is in charge of making sure invoices are paid. In some cases, funeral costs need to be paid up front, before estate funds are available. This may leave loved ones out temporarily out of pocket.

Whatever you choose, we’re here to help

When it comes to planning ahead, there is no right or wrong answer. There is only what you think is best for you and your loved ones.

However, if you think a pre-paid funeral plan might be worth it and are interested in learning more, it may help to speak to a provider or your local independent funeral director to understand your options.

Search for your local Golden Charter-approved funeral director using our free search tool. You can pop in wherever you see our seal.

Otherwise, you can call our friendly team free on 0800 090 2258. They’re available Monday–Friday, 9am–5pm.