Funeral finance plans – are they worth it?

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With the average funeral costing around £3000, many people worry about how they will cover the cost of paying for their funeral. Of course the majority of people pay for their funeral directly from their estate but if you’re concerned that you won’t have sufficient funds, a funeral finance plan could be the solution.
There are a number of designated funeral finance plan providers operating in the UK offering schemes designed to be paid into in advance, either for your own funeral or someone else’s such as your spouse. The alternative to paying into a funeral finance plan is to open a savings account but with interest rates currently so low, a pre-paid funeral plan could be the best choice if you are looking for peace of mind.
So what is a funeral finance plan and how do they work? Put simply, a funeral finance plan is a way to pay for your funeral costs in advance. Funeral finance schemes are operated by specialist plan providers and some funeral directors also offer schemes. Money is either paid into the scheme in instalments or a lump sum, this money is then either invested into a trust fund which is managed by trustees, or an insurance policy and the money is paid out for the funeral whenever it takes place.
It is worth noting that funeral finance plans are not authorised or regulated by the Financial Services Authority which means that the FSA’s compensation and complaints procedures do not apply if things go wrong. Funeral finance plan providers can, if they agree to meet the requirements, register their services with the Funeral Planning Authority although they are under no obligation to do this. The Funeral Planning Authority’s website contains a list of FPA registered providers.
Before signing up for a funeral finance plan, it’s a good idea to consider a few important issues. For example, will your chosen plan allow you to use the funeral director of your choice? What will happen if you die overseas? What will happen if there are extra expenses for arranging your funeral? Can the plan be cancelled and will there be any charges for this? How long will you have to pay into the plan and what happens if you die whilst payments are still due? Any reputable funeral finance service will be more than happy to answer your questions and if you have any concerns, contacting the Funeral Planning Authority for advice is a sensible course of action.
If you do decide that a funeral finance plan is right for you, make sure that you let your next of kin know. You should be given a written record of the arrangements for your funeral plan; keep these records safe and let your family or friends know where this documentation is kept. Whilst a funeral finance plan is not for everyone, having the peace of mind to know that the cost of your funeral has been covered can be a great source of comfort and reassurance.

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