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A funeral plan is a scheme that allows you to pay for your funeral in advance. Here’s what you need to know

One fifth of all UK funerals are now paid for in this way, via a funeral plan, and it’s not difficult to see why an increasing number of people consider this approach a sensible one.

The death of a loved one is often deeply traumatic. If the costs and practical issues are already taken care of, the family left behind could find it easier to grieve their loss, in peace.

Besides, planning a funeral when a loved one has just died can be extremely difficult. Families are emotionally vulnerable, and the process can be bewildering, especially if you’ve never planned one before.

While research reveals that 1 in 3 people in the UK would not want our families to waste money on a fancy funeral, the same does not apply if they’re planning a funeral for someone they love. Many fear, for example, that a cheaper service would look disrespectful… and therefore opt for something more expensive.

Prices can quickly mount up, especially when emotions are running high and decisions have to be made pretty quickly, often within a matter of days.

A funeral plan can work out cheaper. If you pay now and funeral prices rise, they won’t affect you or your family. So if you pay £3000 for a funeral plan it won’t matter if the price for the same plan has increased to £5000 by the time you die. The price you paid is protected – your family won’t have to pay out any more.

Did you know?

A funeral plan is excluded from inheritance tax charges when you die, so the taxman won’t get it.

But it’s not only the costs to consider. Trying to arrange a funeral for someone you love without knowing what they really wanted can be particularly upsetting. Would they want to be buried or cremated? Would they want a church service, or a green funeral? Any particular music or poems? Flowers or donations to charity? These decisions can be particularly difficult when grief is raw.

Many funeral plans will allow you to get all the answers to these questions down in writing, so your loved ones aren’t left wondering.

Planning and paying in advance can take away both the practical and emotional strain. Most plans also offer several different ways to pay, so if you aren’t able to pay for the whole thing, you can pay in instalments, sometimes without interest (see Chapter 6).

So it’s worth considering a funeral plan if

  • You have the money to pay for one or could afford to pay for one in several instalments.
  • You like the idea of being in control of the price and the arrangements.
  • You don’t like the idea of your family being ripped off, spending too much or having to make distressing decisions on your behalf.

However, it’s important to remember

  • Most pre-paid plans don’t include everything – even the most expensive don’t include things such as flowers, catering for the wake and the cost of a head stone.
  • Many plans don’t cover other costs such as limousines and burial fees.
  • If funeral prices come down in future, you may end up spending more by taking out a plan now.
  • If you do take out a prepaid plan, it’s important to tell your family which company the plan is with, so they can notify them when the time is right, and arrangements can be set in motion.