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How do monthly funeral plans work?

How do monthly funeral plans work?

With the average cost of a prepaid funeral plan currently standing at an estimated £4,000, such an initial outlay might put off many people from buying one.   

The good news is that you do not have to find that whole amount all in one go, but instead consider paying monthly for a funeral.   

Why buy a prepaid funeral plan?   

When a loved one dies, the immediate feelings of grief and mourning are likely to be intense. It is a time when the last thing any member of the family is likely to want to do is sort out the emotionally draining complexities of funeral arrangements and – still worse – decisions about how much money should be spent on them.   

A prepaid funeral plan saves your family many of those agonising decisions about the sort of send-off to give you – you have already made your intentions clear. 

An even more compelling reason for buying a prepaid funeral plan is the economic one – pay at today’s prices, and you are in a position to beat a rate of inflation that makes funeral costs one of the fastest rising of all services.  

In fact, there have been lots of stories in the press recently of families experiencing what is know as “funeral poverty”, with it estimated that there is some £160 million worth of debt among families struggling to pay for rising funeral costs.    

The latest Cost of Dying report for 2017 compiled by insurers Sun Life, for example, reveals that the average cost of a funeral in the UK has risen by 4.7% in the last year alone – and a staggering 70.6% in the last decade. That is an increase that far outstrips the general rate of inflation and increases in the prices of such items as bread, energy, petrol or even house prices.   

The same report also predicts a continued increase in the average cost of a funeral:

rising to £5,094 in 5 years

£6,657 in 10 years

£8,700 in 15 years

£11,371 in 20 years

£19,423 in 30 years.   

Inflation at anything like this rate of increase, therefore, makes a prepaid funeral plan very appealing – but what about that price-tag of £4,000?    

Monthly funeral plans   

That is where monthly funeral plans come to the rescue – not only do they let you spread out the cost in any number of monthly instalments (typically between one and 15 years), but the sooner you start such a plan, the greater your savings are likely to be.   

Rather than wait until you have saved the full amount, why not start paying in monthly instalments for your funeral plan now and you still get to pay at today’s prices – beating inflation and saving your family the inevitable financial hardship if they have to find those costs in several years from now.   

As with any instalment plan, of course, there are going to be interest repayments or additional charges, but with funeral costs increasing at their current rate, you still typically stand to make significant savings by starting now in paying monthly for your funeral.   

Here at Simply Funeral Plans, we have worked out some of the savings that might be achieved, assuming the predicted cost of a funeral in 15 years’ time and depending on the number of years over which you might want to spread your monthly repayments – potential savings which range from £5,305, if you make just 12 monthly repayments, to £3,569 if you make monthly repayments over the full 15 years.   

Is my money safe?

Finally, we appreciate that you are paying out a large sum of money and may be worried about its safety.    

You should always make sure that your plan provider is regulated by the Funeral Planning Authority (FPA) which ensure that your prepayment is protected by the purchase of a whole of life insurance policy in your name, which pays out the sum required to buy the funeral services you have selected when they are needed, or in an independent trust fund.   

 At Simply Funeral Plans, we only work with Dignity who are FPA regulated  to ensure your peace of mind.     

We recommend the Dignity Monthly Payment Plan   

As mentioned we have chosen to recommend Dignity Funeral Plans and in particular when it comes to paying monthly for your plan with Dignity:

  • there is no initial deposit to pay
  • monthly payments are competitive
  • once you have made all your payments there will be nothing more to pay, no matter when that is in the future
  • should you die during the payment period, all of your payments will go towards your funeral costs and your family will need to make up any shortfall, but only at the price you paid for the plan, that is, not at the current price which is likely to be significantly higher.
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