Funeral Bonds vs Savings

freshfield017

Hi - could do with some advice.
My parents have £5,000 in savings for their funerals. They have just changed their savings from ISAs to and e-savings account for the best interest rate.
I mentioned about taking out funeral bonds/plans so that could pay for these upfront and not have to worry about getting the best rate for their savings.
Could anyone offer some advice as to which route to take - with pros and cons?
Also, if they were to take out a plan (say with the Co-op) and the company went bust, what would happen to the plan?
Many thanks
Freshfield017

dzug1

The plan is normally with an insurance company, not directly with a funeral director, so there's no great worries there.

margaretclare

Why is it a 'worry' having to get the best rate for their savings? Isn't this what everybody does?

Just make sure that your parents' wishes for their funerals are clearly-expressed and written down somewhere, because this can be a problem when someone dies. No one knew what type of a funeral they wanted - cremation vs burial, service vs no service, flowers vs no flowers/donations to charity, all the other alternatives that are available nowadays.

The price sounds about right, given that I was quoted £2.5K last October when DH was at death's door. That comprised a 'green burial', no limousines, no flowers, service at our church (no cost for that). £5K would cover it for both of us.

Mojisola

If they have enough savings to stay independent of the benefits system, then it probably doesn't matter which they choose to do. For people who need benefits, savings of £6000 will affect the amount they get. As a couple need at least £5000 for two funerals, it makes it very hard to save up for anything else without going over the £6000 limit. In this case, it makes sense to pre-pay for a funeral.

Be_Happy

Mojisola wrote: »

As a couple need at least £5000 for two funerals, it makes it very hard to save up for anything else without going over the £6000 limit. In this case, it makes sense to pre-pay for a funeral.

Like you I had assumed that a pre-paid funeral plan would not be taken into account when claiming benefits, but now I'm not sure about this. When helping a friend complete a housing benefit application form it stated that any pre-paid funeral plan had to be declared amongst other savings.

Mojisola

Be_Happy wrote: »

Like you I had assumed that a pre-paid funeral plan would not be taken into account when claiming benefits, but now I'm not sure about this. When helping a friend complete a housing benefit application form it stated that any pre-paid funeral plan had to be declared amongst other savings.

I haven't heard that before. Why would they want to know - you can't get the money back from the scheme - you've paid it out and it's not your money any more. I hope someone can enlighten us on this.

freshfield017

Hi - thanks for advice received so far. Had not even thought about the possibility of a Funeral Plan being taken into account regarding benefits. Would like to hear views on this please.

Be_Happy

I think the reason it may count as savings is because in some pre-paid funeral plans you can cancel the plan at a future date and get your money back, minus a fairly high administration charge (and obviously the company has gained interest on your money over the years, which they keep).

I also noticed when I was looking at buying a pre-paid funeral plan earlier, that there was a clause in the small print of some plans to the effect that if your 'originally selected' funeral director was no longer in business and the plan couldn't find an alternative company willing to provide the chosen funeral at the same price, they would refund your original payment.

Went round to friend's house to check. She has a copy of her HB application form and exact wording is:

"Do you or your partner have any other savings or investments? If 'yes' give details, include details of any compensation, funeral bonds, or similar you have not told us about."

Mojisola

Be_Happy wrote: »

I think the reason it may count as savings is because in some pre-paid funeral plans you can cancel the plan at a future date and get your money back, minus a fairly high administration charge (and obviously the company has gained interest on your money over the years, which they keep).

Surely this would only affect benefits if you did cancel the plan and get the money back?

Be_Happy

Mojisola wrote: »

Surely this would only affect benefits if you did cancel the plan and get the money back?

Not if they treat the Funeral Plan as money you have set aside similar to savings.

Mojisola

If someone on benefits saves up and pays for new furniture the value of that furniture isn't considered as savings. The funeral plan has bought a funeral - you may not have used it yet, but it has been paid for. I hope it isn't taken into account.