We are often asked if a funeral plan really necessary? Our opinion is yes, they are a sensible investment. They can very cost-effective, especially if you take them out when you’re young. There are a wide variety of funeral plans, with the simplest covering the cost of your burial. Our expert advisers can talk you through the process, ensuring you have a clear understanding of how the plan will work and what it will and won’t cover. You can buy one from a number of providers, who will then pay the funeral director directly for your ceremony, meaning your family won’t have to get involved with any of the finances or administration of the funeral.
We are often asked what the plan will cover and whether it will cover what the family needs. Typically, funeral plans cover the essentials of a funeral, such as the cost of a coffin, care of the body, transport of the body to a funeral director and a hearse. It won’t usually include any extras such as such as flowers, catering for a wake, newspaper notices or extra cars to transport family members to and from the service. If you want these you’ll need to let your family know that they may need to pay for these at the time. However, there are funeral plans that let you add on these extras and more.
We recommend that you think carefully about whether the family will able to deal with the heartache of losing you and having to plan your funeral. Each family is different and it is important to talk to your loved ones about this before it’s too late. Ask them what they feel they could cope with; what steps they think they need to take when planning the funeral and who they would contact about it. Make sure you have voiced your wishes concerning what you would like to happen. Ensure your family members know the location of your important documents, such as your LPAs, wills, any trusts, and the funeral plan. If necessary, we can sit down with your family and explain the funeral plan process to them.
Do I have to pay off my plan all at once?
No, most of the funeral plan providers we use offer a payment plan which allows you to pay it off in smaller, more affordable sums, but the option to pay the total cost at once is available.
Can I make personal requests in my plan?
Yes. These could involve certain songs, poems or the type of casket. The amount of flexibility you have regarding personal requests will depend on the plan provider. Your LR Estate Planning adviser will advise you about the best options available to you.
Why not just save money in the bank?
The reason we advise that you use a funeral plan is because you are getting money out of the estate and this could help if you are on the threshold of incurring a tax liability. Taking out a funeral plan also means that you are lessening the stress and upset your loved ones will experience when planning a funeral whilst at the same time grieving. It also ensures it’s paid for, meaning your beneficiaries won’t have to pay for it. With funeral costs increasing, it also ensures you get a better deal.
Is a burial more expensive than cremation?
Yes, because you have the cost of the churchyard or graveyard’s burial plot to take into consideration. But if you already have a family burial plot this will bring down the price of the funeral plan.
How can you be sure my plan will pay out?
Although the Financial Conduct Authority (FCA) does not directly regulate funeral plans, your provider will invest the money you have paid them into a trust fund or an insurance policy that will pay out when you die. Both trust funds and insurance policies are covered by the Financial Conduct Authority and are highly regulated industries.
Where is the best place to store my policy?
We offer a safe and secure access-controlled document storage facility, where all your documents can be looked after, including wills. If you’d prefer to look after them yourself, we highly recommend that you keep them at the bank if your bank branch allows deposits of personal items or documents. A box file or drawer in your home office is NOT a safe and secure location and we would direct you to our wills case study to understand the importance of proper document storage.
Why is it better to take out my policy sooner rather than later?
This is because of the inflation in the cost of funeral plans over the last few years – a cost which is predicted to keep rising.
Can I take out a plan for someone else?
Yes – although most plan providers won’t let you gift your plan to someone else.
Can I change the details of my plan?
Yes, but how much you can change depends on your provider. We suggest that you talk to your LR Estate Planning adviser for more information on this.
What if I’m not in good health?
In your first meeting with us you will be asked to fill out a ‘fact find’, which includes a section about your health. This will inform the policy provider about your current lifestyle and health, and the plan can then be tailored.
What happens if I die abroad?
If you die abroad, a typical plan won’t cover the cost of transferring the body back to the UK, if that is where you wish to be buried. If you are concerned that you could pass away when you are abroad, then we would advise that you take out a robust travel insurance policy that covers this situation.
Who is eligible to take out a plan?
Anyone aged 18 or over can take out a funeral plan.
Can I use my plan as a savings pot – for instance, will we get a lump sum back if I pay more in?
You won’t get a lump sum back — your funeral plan will simply cover the cost of your funeral. The plan isn’t designed to be used as a savings account and we recommend you talk to an independent financial adviser from LR Financial Services about the best way to make your savings work for you.
How is the money in the plan looked after?
The money that you pay out to cover the cost of your funeral plan gets entered into a collective trust fund set up by the provider, and is well protected.
LR Connections provides expert independent financial advice, accountancy and estate planning services
