How to help clients understand pre-paid funeral plans

In 2016, more than 210,000 plans were sold by providers registered with the Funeral Planning Authority, which make up a majority of the UK market.

But despite this clear evidence of funeral plans’ burgeoning popularity, they remain relatively untapped by a large proportion of advisers.

So what exactly is a pre-paid funeral plan, and what does it do?

In simple terms, a pre-paid funeral plan allows the client to pay in advance for their funeral at today’s prices. The majority of plans guarantee that there will be nothing more to pay for the funeral director’s services included in the plan – no matter how much costs rise in future. 

Most will also include a contribution towards third party costs, for example costs out with the control of the funeral director, such as cremation or burial fees and officiant fees, meaning a top up may be required by the family at the time of the funeral.

These third party costs, also known as ‘disbursements’, are subject to significant regional variations.

Some people also find comfort in knowing who will be carrying out the funeral when the time comes, but not all providers offer this choice.

To demonstrate, the cheapest cremation fee in the UK currently is provided by City of London for £407, while the most expensive is in Beckenham at £999.

Some funeral plans offer clients the option of a full guarantee, ensuring all funeral directors’ services and third party costs included in the plan are guaranteed to be covered.

What are the benefits?

The most obvious benefit of taking out a funeral plan is financial, in that the funeral director’s services are guaranteed to be covered at today’s prices. This is particularly beneficial given the steep increase in funeral costs in recent years.

The SunLife Cost of Dying Report, which has been tracking funeral costs since 2004, shows that the average cost of a basic funeral in the UK is £4,078 – up by 112 per cent from £1,920 just 13 years ago. This means that if current trends continue, the average funeral could cost more than £7,200 by 2027.

However, a lesser understood or even known-about benefit is, undoubtedly, the peace of mind this can bring to an individual and to their family.

While a funeral plan can make financial sense, many plan holders speak of the reassurance to be gained from knowing that their funeral will be taken care of when the time comes - it is one less thing the bereaved have to arrange themselves.