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What is a prepaid funeral plan?

A prepaid funeral plan lets you arrange and pay for your funeral in advance. It allows you to choose and arrange the funeral service you want, and pay for it at today’s prices, removing some of the worry from family when the time comes.

But with a number of options available, understanding how a prepaid plan works is key to deciding if a funeral plan is the right decision for you.

Is a prepaid funeral plan a good idea?

Whether it's a good idea to have a prepaid funeral plan will depend on your requirements, budget and the funeral planning company you choose. If you want to arrange and pay for your funeral in advance, have the money available and understand how your chosen plan works, then a prepaid funeral plan could be a good idea.

Whilst a funeral plan could save you money however, if costs reduce over the years, there is a chance it could be more expensive.

From 29th July 2022, the Funeral Planning Authority will be responsible for the regulation of funeral plans and the protection of consumers. Therefore it could also be a good idea to choose a plan that the FCA intends to approve.

How do prepaid funeral plans work?

A prepaid funeral plan lets you arrange and pay for your funeral in advance. You simply choose the type of funeral you want, pay at today’s prices, either with a one off payment or monthly instalments and the funeral director will take care of everything detailed in your plan when the time comes.

The services included in a prepaid plan vary depending on the company and type of funeral plan you choose. A standard plan will usually include the services of a funeral director, a coffin, hearse, use of the chapel of rest, the funeral service and the cremation or burial fees. Midrange and superior plans are also available that include a better quality coffin and limousines for family.

Some plan providers also offer a limited funeral plan that will include the basic funeral requirements but have some limitations such the time of the funeral service or choice of funeral director.

Are prepaid funeral plans safe?

The Financial Conduct Authority will be responsible for the regulation of prepaid funeral plans from 29th July 2022. From that date, all funeral plan providers must be FCA authorised.

Authorisation means the funeral plan provider has had to demonstrate they comply with the FCA’s rules and code of conduct, ensuring consumers are protected and their money is safe. It also means that consumers have access to the Financial Services Compensation Scheme should the plan provider become unable to provide the services detailed in the plan.

So to check your chosen funeral plan provider is safe and on the FCA’s list of ‘intended to authorise plan providers’, visit their website.

How much does a prepaid funeral plan cost?

The cost of a prepaid funeral plan ranges from £3,000 to £4,300 depending on the funeral services included.

  • A superior prepaid funeral plan will usually include a superior coffin and two limousines ancd costs around £4,300
  • A midrange funeral plan with one car could cost in the region of £3,800
  • A standard prepaid funeral plan with no car could cost in the region of £3,500
  • A limited funeral plan with some restrictions, such as the time of the funeral service, could cost as little as £3,000.

If you prefer a cremation only prepaid funeral plan with no service, then you may like to take a look at a direct cremation funeral plan.

What is the best way to prepay for your funeral?

The best way to prepay for your funeral will depend on which option works best for you. You can pay for a funeral plan in full or monthly and your money is held in a trust fund or life insurance policy. The cheapest way to pay is either by single payment, or over 12 months as most funeral plan providers won’t charge extra for this payment option. If you prefer to spread the cost then a monthly prepaid funeral plan may be a more suitable option.

What are the prepaid funeral plans pros and cons?

With approximately 1.4 million plans already purchased in the UK and demand increasing every year, being aware of the pros and cons of prepaid funeral plans is more important than ever.

Prepaid funeral plan PROS

  • It could save you money by paying at today's prices if funeral costs continue to rise
  • Your family won't have to make your funeral arrangements
  • Choose the type of funeral you want
  • If you move within the UK, the plan moves with you*
  • Flexible payment options to choose from
  • Reduces your liability for inheritance tax

*Depending on the plan provider you choose

Prepaid funeral plan CONS

  • There may be additional funeral costs to pay for when the time comes
  • It could cost more if prices go down
  • Funeral plans aren't currently regulated, but will be from 29th July 2022
  • Your money will be tied up
  • You won’t be able to use your prepaid funeral plan if you move abroad (unless choose a European funeral plan)
  • It may restrict your choice of funeral director

Why plan your funeral in advance?

Planning and paying for your funeral in advance this way could be a wise decision for two reasons:

Funeral costs have risen

The average cost of a funeral in the UK is currently £4,056, a rise of over 100% since 2004. According to Sunlife's research, funeral costs could rise to over £5,000 by 2026. With a prepaid plan, your funeral services are fixed at today’s prices. This means you avoid future inflation and will never need to worry about rising funeral costs again.

Kind to your family

In addition to saving money, a simple prepaid funeral plan can be a huge relief for families as it removes some of the worry of arranging and paying for a funeral.

Instead, they just call the funeral planning company when the time comes and they will take care of the arrangements as detailed in your plan.

What is funeral insurance?

Funeral insurance is a term frequently used to describe prepaid funeral plans. Whilst some plans hold your money safe in a life insurance policy until it is needed to pay for your chosen services, funeral insurance should not be confused with life insurance.

Whole of life insurance and over 50 life insurance plans  offer an alternative solution for helping with funeral costs. Policies are designed to pay out a cash sum when you die that your family can use how they wish.

pros and cons

Who are Simply Funeral Plans?

The team at Simply Funeral Plans is a bit geeky when it comes to funeral cover. With over 10 years experience in funeral planning our guides could be a good starting point to help you with your research into finding the right cover that suits your needs.

We believe you should have complete confidence in your prepaid funeral plan, knowing that when the time comes, it will provide the services as promised in the plan, with no nasty surprises and no hidden costs.

Quite simply, we want you to find a funeral plan you can trust.

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