what is a funeral plan

tony007_2

What is a funeral plan is it like insurance. I am thinking of taking one out for my wife who is older than me, I have seen one that allows monhly payments over 60 months, will these payments cease on the death of my wife or will I have to pay fo the full 60 months? Is there a period before the plan kicks in? I hope this wont happen in the 60 month period I dont like asking these questions but I would like to know before taking out a plan.:(

jonesMUFCforever

IMO consult an IFA - whole of life plan may be better for you.
He/she will do a fact find to give you precise answer.

forgotmyname

Funeral plan where you pay for the funeral at todays price and know its sorted for later.

Or an insurance policy type plan that pays out on death?

stevepett

Whole of life with profits used to be a great way to pay for a funeral until the Regulators screwed it up and made it too paper intensive for IFAs to sell economically. Most life insurance based plans are now non-profit whole of life which has NO SURRENDER VALUE. That means if you miss payments or can afford them any more, you lose EVERYTHING.

Proper funeral plans are much better:
http://www.prepaidfuneralreview.co.uk/what-is-a-funeral-plan/

Steve

stevepett

Forgot to say that if you buy a non profit "funeral" plan, make sure that it is in trust so the payment doesn't go into your estate so it can't be used to pay for your funeral until Probate has been granted, perhaps 6 months later. Funeral directors are patient, but not that patient and your relatives will have to stump up, and cover the shortfall as nearly all Life Insurance "Funeral" Plans do NOT increase to cover inflation!

Steve
PS Well over 1,000,000 have non profit "funeral" life insurance!

Didn't answer Tonys question:
With a proper prepaid funeral plan, if you buy it on instalments and die half way through, you will normally have paid for half of the funeral. They are NOT life insurance policies.
On the plus side, you are covered for funeral price inflation with a proper funeral plan, at least for the undertakers fees. They generally offer price index inflation on other parts of the plan, though the more expensive ones offer more guarantees.
With a life insurance "funeral" plan which is non-medical, if you die in the first (normally) 2 years there is no death benefit, only a refund. But inflation eats away rapidly at the real value, leaving an increasing shortfall.

dunstonh

Proper funeral plans are much better:

not necessarily. For some yes. but not for all.

There are still some investment backed whole of life plans available but the non-investment backed plans are typically cheaper and more flexible on payment options. You can have single premium, fixed term payments (where you retain whole of life cover but only pay over a defined period). The sum assured that someone in their 50s or 60s would get for a small premium could very much much higher than the cost of a funeral.

pre-paid funerals can be better for those who have medical conditions that impact on the cost of life assurance or those that are older.

The one to avoid in most cases is the over 50s life insurance plans which are rarely good value and should be an option of last resort.

Mojisola

tony007 wrote: »

What is a funeral plan

My parents both bought funeral plans (from AgeUK but there are plenty of other firms). They decided the type of funeral they wanted and paid for it monthly. If they had died before the full amount had been paid, what they had paid would have been returned so that we could put it towards the funeral.

When Mum died, we told AgeUK and they contacted the funeral director who is contracted to them. Everything went very smoothly. We had a small bill to pay because we added a few extra items that Mum hadn't chosen but everything else was paid between AgeUK and the funeral company.