What are funeral plans?

Funeral plans may be set up directly by funeral directors, or by national providers, to allow you to choose the funeral arrangements you want and to pay the whole, or a large part, of the arrangements in advance. They are usually a late life planning decision, but can also be done for those in different life stages, or those with terminal illnesses, or for example.

Whether you are buying direct from your local funeral director or from a national provider of plans, you are able to choose from a wide range of packages – from simple funeral plans to something more elaborate. The choice is very much your own.

By making the arrangements and paying for those services in advance, you save your family or friends from trying to decide what you might have wanted and also give them the financial means of seeing through the arrangement for which you have already paid.

How to pay for your funeral plan

Whether you are buying the plan from a funeral director or a national provider, you may have the option of paying for the plan in a single lump sum or by monthly instalments – sometimes being able to spread these over as long as 15 years (provided the last instalment is made before you reach a certain age, of say 85).

Payment by instalments may be the more attractive option if you are of relatively limited means and need to spread out the financial burden over a longer period, but you are naturally likely to pay more in the longer run.

How your prepaid funds are protected

If you pay for your funeral advance, one of your objectives is to beat the effects of inflation by paying for funeral services at today’s prices. But is there any certainty that what you have paid today is actually going to cover the cost of the arrangements you have planned?

The answer is yes and it is typically achieved by the funeral plan provider investing in an independently managed trust fund, with sufficient growth to guarantee that the funeral director’s services are covered in future.

Ensuring that such a safeguard is in place is likely to be one of the important questions to ask any prospective provider, and, if no trust fund is mentioned, you might want to ask what alternative measures are taken to guarantee the availability of the means to pay for your funeral in the future.

One of those alternatives, for example, is for the provider to arrange a whole of life insurance policy in your name, so that when you die, the insurance settlement is sufficient to cover the costs of your funeral.

Other concerns and questions you may have

The charity Help the Aged suggests a number of other considerations and areas of concern you might have about your prepaid funeral plan:

  • check exactly what is included in the package you are buying – Help the Aged suggests asking whether pall bearers are provided, whether there is transport by hearse to the cemetery or crematorium, and whether any of the funeral director’s disbursements are also included;
  • are you able to choose your funeral director or is one designated by the provider; and
  • what are the providers’ policies with respect to the possible need to cancel the plan?

With satisfactory answer to questions such as these, you may decide that a prepaid funeral plan provides a solution to your eventual needs and last wishes.