Funeral plans vs insurance vs savings

cliver1956

As I am now of a certain age (64) :eek: I would like to make arrangements for my funeral to save the family the trouble when I am gone.
Looking for opinions/guidance on the best way forward. Prepaid plan, Insurance or just a savings pot?
I'm not looking for anything approaching a state funeral. Something fairly basic will do me.
I'm thinking a prepaid plan would give the best guarantee that my decendants won't have to fork out after I'm gone? However I have read some horror stories about these plans as well.
So, are prepaid plans the way forward? If so which plans are the best?
Or is there a better alternative? I'm given to understand that they can't just put me in the recycle bin :A.
Any guidance apprecated.

Malthusian

Your descendants won't have to fork out regardless; that is already guaranteed. Your funeral costs have first claim on your estate and if there's not enough you can be disposed of via a Public Health Funeral.

If you have money that you don't intend to ever spend until you are dead, and are holding it in cash, then it will be eroded by inflation over the next 20+ years (assuming you are in good health and not unlucky). Worrying about rising funeral bills is failing to see the wood for the trees. The price of everything goes up, not just funerals.

Robin9

More importantly - have you a will ?

Brynsam

Forget funeral plans; rarely worth the money. The funeral will be paid for out of the funds you leave, or as post 2 points out, the state could step in if they have to.

What will really help your nearest and dearest is a will which includes information about the type of funeral you'd like. There are so many more choices these days that grieving relatives often struggle to work out what the dear departed is most likely to have wanted - and you can bet there are as many different opinions as there are concerned relations. Church, crematorium, humanist...hymns, jazz guitar, Sunday School recorder group...cardboard coffin, walnut inlaid with gold...

cliver1956

Thanks for the replies. My will is already in place so no worries there. Current trends seem to show funeral costs rising faster than inflation. So, I'm not convinced it doesn't make sense to lock the cost in now with a pre paid plan. Thanks for the thoughts anyway.

pattycake

Don’t forget that banks/building societies will pay funeral costs from your account before probate has been obtained upon production of the right documentation.

My mother actually opened an account with a few thousand pounds in it with the Nationwide for this purpose. After her funeral, we took the undertaker’s account in and a cheque was issued to settle.

Her estate took a further year for a solicitor to finalise. Incidentally, when my father passed away a few years later, we learned by our mistake in instructing a solicitor to deal with mum’s estate and did probate ourselves. Much quicker and considerably cheaper.

Malthusian

cliver1956 wrote: »

Thanks for the replies. My will is already in place so no worries there. Current trends seem to show funeral costs rising faster than inflation. So, I'm not convinced it doesn't make sense to lock the cost in now with a pre paid plan.

Diversified stockmarket investments also generally rise faster than inflation (provided they are properly diversified, non-geared, and not sold in a panic) although nothing is guaranteed. If you have money which you are certain you won't ever spend until after your death, it makes little sense to dump it in cash to be eroded by inflation over the next 10-20 years or more. If it is already invested in real assets then a funeral plan is superfluous.

Funeral plans are a sub-optimal solution. There is a reason they are sold by daytime TV adverts and cold-calling spivs rather than independent financial advisers.

Mojisola

If you don't have much in the way of savings and rely on means tested benefits, buying a funeral plan can be a good idea.

You can pay in instalments and the money in the plan doesn't count as savings.

Like with anything, you need to research plans carefully and make sure the one you chose covers all the necessary expenses. Some only cover items up to a set amount.

I'm about the same age as you and wouldn't consider buying a plan yet.

badmemory

My funeral is bought & paid for & the basics arranged. The notes with the funeral director even have something that I wish them to say to my son. I bought mine 4 yrs ago & it has already gone up over £1000. If I had managed to get 5% interest on my money I would already be £600 short!



I think that the earlier (& further away from you actually needing it) you do it the easier it is to deal with, as I gather some people get upset. I just felt relieved it was sorted.


What about Power of Attorneys?

Malthusian

Mojisola wrote: »

If you don't have much in the way of savings and rely on means tested benefits, buying a funeral plan can be a good idea.

You can pay in instalments and the money in the plan doesn't count as savings.

True but it is debatable whether anyone on means tested benefits should be cutting themselves to the bone in order to save up for a funeral. In theory means tested benefits should be just enough to keep body and soul together.

If someone on benefits was asking about borrowing money to pay for a relative's funeral we'd be telling them in the strongest possible terms not to do it, and to let the council pay. I don't see that it's any different if it's their own funeral.

If you are on Pension Credit, for example, you can have £10,000 in savings before it affects your benefits. If you are fortunate / thrifty enough to have spare income despite being on Pension Credit, you should build up your savings to the maximum allowed before even considering a funeral plan - a rainy day might come or the Government might cut benefits, leaving you very glad of having £10k in the bank.

And £10,000 will buy a pretty good funeral by the standards of someone so thrifty they don't spend all their Pension Credit.

Malthusian

badmemory wrote: »

My funeral is bought & paid for & the basics arranged. The notes with the funeral director even have something that I wish them to say to my son. I bought mine 4 yrs ago & it has already gone up over £1000. If I had managed to get 5% interest on my money I would already be £600 short!

Those figures suggest you paid £1,850 for your funeral plan four years ago and the funeral director is now charging over £2,850, an 11% year-on-year increase.

If the guy is able to increase his fees by 11% every single year and still get business through the door then all power to him. Maybe he was very cheap four years ago or maybe people are incredibly price-unconscious in his area, even by the standards of grieving relatives. However if that inflation rate held for the funeral market in general, every venture capitalist and private equity firm in the land would be scrambling to enter the market and make free money.