Published on November 17th, 2015 | by admin


What is a funeral plan?

On the face of it, nothing might seem easier than making a funeral plan – it may be a simple question of deciding how you or a loved one wants to commemorate a life in an event for family and friends. The wishes are conveyed to your local funeral director who then charges a fee for making all the arrangements.

In reality, as there are different options, knowing exactly what is a funeral plan might be is considerably more complicated – let’s suggest why:

  • a funeral plan is likely to involve more than just choosing the flower arrangements, the hymns to be sung and the minister to conduct the service;
  • there is the question of choosing a funeral director – and looking ahead, having an alternative firm in mind if the first one faces financial difficulties and closure;
  • what exactly is included in the funeral director’s services and, if there are likely to be additional costs involved, what are these;
  • the cost of services – but especially the costs for funerals, it seems – are rising all of the time, so what arrangements if any are in place to meet those increased costs;
  • the legal aspects might prove a whole chapter in themselves – where can I get help with things like wills, probate, and powers of attorney;
  • you may think: I want to pay the funeral director in advance, so that the cost is not left to my family to bear – but how can I make sure that what I pay now is enough for the service planned for the future or that the money I pay now is safe and secure?

The funeral plan

In response to questions and difficulties such as these, more formal funeral planning arrangements, including their prepayment in a safe and assured way, have been devised.

The prepaid funeral plan typically            gives you full choice over the arrangements for your own funeral, or that of a relative on whose behalf you might be making such a plan.

These are formal and contractually binding plans. Indeed, the Funeral Planning Authority reminds us that the definition of a funeral plan is written into the Financial Services & Markets Act 2000 (Regulated Activities) Order 2001.

In essence, the funeral plan creates a contract between the customer and the plan provider requiring the latter to provide the services defined by the customer in return for the appropriate payment. That payment is typically made by way of:

  • a single payment – which the provider in turn pays into a trust fund from which the eventual costs of providing the funeral are drawn;
  • 12 monthly instalments – the proceeds again being paid into a trust fund for safe keeping;
  • monthly instalments spread over a longer period – say 24 to 36 months – with the funds again being held in trust; or
  • continuing monthly instalments (for life or until the age of 90) which are effectively life insurance premiums for a policy that pays out whenever the guaranteed sum is required.

Because the payments are held in trust, there is no risk in your chosen funeral director going out of business, since the funds may be applied to alternative funeral director you may designate.

Funeral plan providers may also offer help and assistance with such legal aspects as wills, probate, and powers of attorney.

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