Question on Funeral Plan or Funeral Insurance

peter021072

My Brother and his wife has taken out a funeral plan a few weeks ago. He has asked me for advice. It seems to be a savings plan with something called Installation fee tagged on which boosts the cost by around 50% over the ten year saving plan. [edit - this is to allow for inflationary costs of funeral expenses]

peter021072

I've asked a few questions to the pension plan provider, and it isn't insurance. It's nothing more than an inflexible savings plan. It caps the eventual price of the funeral in case costs escalate considerably, However they would have to increase at more than 4%/yr to be worth it, and even then I guess the funeral is more expensive than they would otherwise choose. Even with present interest rates it would be far better value just to save up in a savings account.

Owain_Moneysaver

peter021072 wrote: »

Even with present interest rates it would be far better value just to save up in a savings account.

It probably would be.

However, money in a savings account could be taken to pay for care while alive, or count against income-based benefits, and your brother may also like the fact that family won't have so much to arrange at the time - they can just phone the plan provider who will arrange a funeral director.

Does the plan include a headstone or burial plot, if desired - with most plans those are (sometimes unexpected) extras that have to be paid for.

peter021072

It doesn't include Burial plots or Floral tributes. There's £1000 + CPI towards disbursement costs which are Cremation, Doctors, Ministers fee, 'additional services requested but not included in plan memorials, such as obituary notices and wake.