When pre-planning there are 2 key elements to consider, firstly planning the funeral you want, so you don't leave your family guessing what you would have wanted. From listing the music and whether you want your life celebrated with a party or a more traditional wake to whether you want to be cremated or buried.
Secondly, funerals aren't cheap! In 2004 the average cost of a funeral was £1,920, today they cost £3,593 and if inflation continues at this rate they could cost over £6,000 in 10 years time.
So what are your options for paying for your funeral ?
Prepaid funeral plans
A prepaid funeral plan is the only way that will enable you to pre-plan your funeral arrangements and freeze your funeral director's costs at today's prices.
Prepaid funeral plans are provided by several plan providers, Golden Charter, Coop, Dignity and several others, whoever you choose you should check that they are regulated by the Funeral Planning Authority to safeguard your money.
When you buy a plan the provider will arrange your funeral services with a local funeral director, so you get the financial protection and flexibility of a national provider with the benefits of being looked after by a local company when the time comes.
The benefits of buying a plan through one of the large funeral plan providers, as opposed to directly with a local funeral director is that your money will be invested in an independent trust fund safeguarding your money. In addition, the flexibility means that should you move house your plan can be reallocated to another funeral director, plus if you buy directly locally this could mean that should your local funeral director go out of business you could lose your money.
How do funeral plans work?
Most providers offer 3 levels of service, all will include your funeral directors services including the coffin and hearse. They also include what are known as 3rd party costs, such as your cremation or burial, doctors and ministers fees. (Some providers offer a 4th option that don't include these 3rd party costs).
So what can you personalise with a plan?
The pre-set plans allow you to choose the quality of coffin, whether you want limousines to follow the hearse and options for family to view the body. Plans will allow you to specify whether you want a religious or non-religious service, plus you can specify the things you want to happen, like the music, readings, party or wake etc.
No plan will arrange or cover the costs of a burial plot, so you will need to approach your local council about this would you wish to be buried.
Some plan providers will allow you to nominate a local funeral director, for example, Golden Charter plans are accepted by over 3,300 local independent funeral directors.
Once you have decided on the level of service and apply for a plan the funeral plan provider will contact your nearest local independent funeral director or your nominated one if you have a preference - this will be confirmed to you along with your Certificate and Membership pack a couple of weeks after you have applied.
It's advisable to tell someone that you have a plan in place, so when the time comes they will be reassured that your wishes have already been taken care of.
What are your payment options?
You can pay in full with one payment by cheque, credit or debit card or you can pay with monthly payments starting from around £21 a month. Whilst many people don't consider their own mortality until later in life, the sooner you start a funeral plan the more money you could save your family when the time comes, as you will be securing it at today's prices, therefore avoiding funeral inflation.
Cremation or Burial
Over 75% of people in the UK choose a cremation, mainly as a personal choice, but also burials are more expensive and seen as a more traditional option. If you do choose a burial, you will need to arrange your burial plot usually with your local council unless you wish to have a more eco friendly funeral in a Woodland Burial Ground. Also if you are a member of your local parish church often the service will be provided cheaper.
Where can I get help?
You can go direct to a funeral plan provider or to a specialist company that will advise you and talk you through your options. These companies will get paid a commission from the plan provider for recommending the plan to you, but often they will offer a discount or cashback as a thank you for buying the plan through them - so you get the same plan as going direct only cheaper!
Over 50 Life Insurance
Over 50 life insurance plans will provide a cash sum to help with funeral costs, but are not funeral plans and so you will have to make separate arrangements for your funeral. You should also note that inflation will erode the cash value over time, so the buying power will be less and you have no control over whether they will pay for all or some of the funeral costs.
However, for those on a tighter budget they offer an option to help your loved ones with a cash sum that they can use to help with your funeral costs, starting from £4 a month they are seen as an affordable option.
Use your savings
If you are lucky enough to have sufficient savings to pay for your funeral you may decide to use these funds, however, with funeral inflation averaging 6.1% since 1980 and current savings rates of around 1% to 2% it's not difficult to see why buying a prepaid funeral plan could be a good investment.
In addition, earmarking your savings today doesn't guarantee that you will still have this money when the time comes.
Leave it to your Estate
Leaving it to your estate to pay from the proceeds of the sale of your property and or assets is an option, and of course for most people who don't plan their funeral this will happen as a matter of course. The trouble with doing this, is that often bills need to be paid before assets are realised, which can force your family to find money, sometimes borrowing it, in order to pay for your funeral.
You can help your family by talking about what you want to happen when the time comes and better still put plans in place. With funeral inflation averaging 6.1% since 1980 it's not surprising that funeral plan providers increase their prices every year so there has never been a better time to start planning.