Young persons Funeral Plan

sultryabyss

I'm nearly 26, and although some would consider very young, I've been considering funeral plans to cover the cost should anything happen to me. Because I am young and I believe (and hope) I have a lot of life left in me, I think I have the advantage of paying a small amount (say £5) per month over an extended period of time.
I want a tailor made funeral plan, am I best off saving money myself in a bank account or paying a funeral care plan provider?

My worries are that most Funeral Care Plans are over 12-60 months, where as I would rather have mine over around 120 - 150 months. And also I worry that if I have a private savings account that the money won't go to my family should I die and the bank could keep it?

Any advice?

opinions4u

How about a life assurance policy?

McKneff

Even paying £5 a month, whereever you put it is going to take a long time to pay for a funeral, if you live another 50 years, there still wouldnt be enough, because funerals will cost 100 times what they are now. Do the maths. 50 years at £60 a year is peanuts and would go nowhere to pay for it.

Why not just take out life insurance which would pay out on death.
That seems the easiest way.

Make a will outlining all your wishes.

The banks cannot keep your money as long as you have details of any accounts that your family know about at your death, these could be left with your will.

marathonic

The reason funeral plans are over short periods is because it's VERY rare for someone of your age to get one - and definitely not advisable. They're more for older people (a lot older) who can't get, or afford, a standard life policy.

Putting aside the fact that you are so young, if you've decided that you want money set aside for a funeral should the worst happen, you're best getting a normal life insurance policy and writing it in trust - with your family as trustees.

Looking at http://www.moneyworld.com, and assuming you are healthy and a non-smoker, you could get a Life & Critical Illness policy for 20 years with Guaranteed Premiums with £30,000 cover for £6.01 per month.

This would pay out £30,000 if the worst should happen and would also pay out the same amount if you got one of the Critical Illnesses listed on the policy.

Alternatively, you could get a standard life policy (without the critical illness cover) and increase the amount insured to £110,000 over 20 years for £5 per month. The reason I used £110,000 is because you get that amount of cover for £5 per month and £5 is the minimum monthly premium - so £30,000 cover would cost you the same.

The big advantage of selecting a life insurance policy is that, if you end up meeting a partner and buying a house, chances are the amount covered will be enough to pay off the mortgage should the worst happen - rather than leaving your future partner saddled with debt.

innovate

sultryabyss wrote: »

And also I worry that if I have a private savings account that the money won't go to my family should I die and the bank could keep it?

Any money that you have saved or invested is part of your estate. Only the HMRC will be able to withhold anything of this from your family, in the form of inheritance tax.

If you want to be sure your family knows where you have what money, make sure someone you trust knows what you have where, or how to find out what you have where once you passed away.

marathonic

If this insurance is going to be your only asset (and I assume it is if you think that you wouldn't leave behind enough to cover a funeral should the worst happen now), I wouldn't even bother a Will - it'll cost about £100 and you'll probably need to change it within a few years as your assets grow or you meet a partner or have children.

Instead, I'd get a standard Life Insurance policy written in a Discretionary Trust. What this means is that you assign the policy to people who you trust will deal with the money according to your wishes after your death - it could be parents, brothers, sisters, friends, etc.

The policy, if written in trust allows the people you've assigned as Trustees to distribute the money to a certain group of people after your death. It also avoids any inheritance tax on the payout and the money is available to the people surviving you a lot quicker.

As an example, my policy will allow my parents to distribute the money however they see fit among the following people:

• Spouse (if I have one upon death)
• Children or Grandchildren (if I have any upon death)
• Any of my parents descendants (so brothers, sisters, nieces, nephews, etc)
• Any other person or charity who I wish to name when creating the trust

Writing the policy in trust simply involves taking the policy out and asking the insurance company for the "Discretionary Trust Form".

Basically, if you were to take out a policy for £110,000 over 20 years it'd cost about £5 per month. If you were to pass away in 5 years time with a pregnant girlfriend, the person you assign as Trustee would be able to give a portion of the money to your child - even if you didn't know they existed at the time of death. In fact, they could distribute it however they wanted among the above people.

When writing a policy in trust, you can leave an 'expression of wish' which basically tells the person you've assigned the policy to how you'd like the money distributed. However, they are not legally bound to this so make sure it's someone you think would definitely take your wishes into consideration.

Also, make sure you select Guaranteed Premiums - this will ensure that the premiums will stay the same for the life of the policy and not be reviewed upwards in, for example, 5 years time.

TELL THE TOTAL TRUTH IN THE APPLICATION OR YOU RISK THEM NOT PAYING OUT

dunstonh

I doubt a life policy is needed. No-one appears to be financially worse off in the event of your death and it is statistically unlikely at your age. The money in your bank accounts is not kept by the bank. It forms part of your estate and is paid to your beneficiaries stated in your Will. If you have no Will then it follows the laws of intestacy. So, make a Will.

missile

At 26, I would hope you have more important priorities than a funeral plan!

marathonic

If your assets are insignificant and you intend to leave them to the person who would receive them under the intestate rules (probably the parents in the case of the op), is there any need for a Will?

I agree that a Will is needed if you have enough assets that you want to share out among, for example, siblings.

marathonic

missile wrote: »

At 26, I would hope you have more important priorities than a funeral plan!

I'd tend to agree and would be looking at Income Protection instead (if it's not provided by the OP's employer). However, wanted to answer the OP as opposed to dragging the thread off topic.

Mojisola

sultryabyss wrote: »

I want a tailor made funeral plan, am I best off saving money myself in a bank account or paying a funeral care plan provider?

You can put all your plans in a letter and either store it with your will or with other paperwork which will be looked at when you die.

You are very young and you may change your ideas for your perfect funeral so remember to rewrite it if necessary.

I wouldn't buy a funeral plan at your age. Who knows where life will take you? You could be living somewhere else in the world in 50/60/70 years time!