Pre-paid funeral plans (Under 50)

collinsca

Hi
I appreciate there is a wealth of information on this site on this topic, and i am making my way through it.  I would be keen to garner some experiences on this...
My wife and i are considering setting up pre-paid funeral plans. We are both mid 40s.

I think its a great idea to plan for the future, but as mentioned on a page on this site, you pay for ever and therefore you could end up paying more than you receive. This doesnt sound 'right' (morally) to me, but there you go...!
Given this, would a savings account not just be a better alternative (so you estimate what a funeral will cost (or keep paying into it and never need pay more)? 
"Premiums are payable for life and you could pay more in than is paid out on death."...... "Because the amount it pays out is fixed, if you live a long time you may end up paying more for the plan than you'd ever receive."

https://www.moneysavingexpert.com/family/prepaid-funeral-plans/
https://www.moneysavingexpert.com/family/death-plan/

Many thanks!

Marcon

Put some money aside in a savings account and put instructions in your will about your funeral. Family members will feel honour bound not to go for the cheapest of everything, particularly the coffin (but given what's going to happen to the coffin, why waste money on fancy trims etc), but if you specify...

Savvy_Sue

Do you think your estate(s) will leave the wherewithal to pay for a funeral, or will there be a liquidity problem? 

what is most useful, I feel, is to make sure other people know what you would like in a funeral: burial or cremation; if the latter where you might like your ashes; and so on. 

Spendless

My Mum took one out on my Nan 6 years ago . I'm a bit confused by your 'you pay forevermore' as this wasn't what they did. It certainly cost at 'tomorrow's prices' but since Nan has lived 6 years since it was bought , a funeral today would be pretty much in line with what the policy cost (£5k). There are some things it doesn't cover, as explained in one of your links, but there's no ongoing fee they pay.  

Mojisola

collinsca said:

My wife and i are considering setting up pre-paid funeral plans. We are both mid 40s.

"Premiums are payable for life and you could pay more in than is paid out on death."...... "Because the amount it pays out is fixed, if you live a long time you may end up paying more for the plan than you'd ever receive."

Two things -

I wouldn't consider getting a funeral plan yet and I'm a couple of decades older than you.  You might live for another 40 years - who knows what changes could have happened in that time? 

For the time being, keep some money aside just in case the worst happens.

It's more important to have wills and POAs sorted out.

I don't understand the bit in bold - when you buy a funeral plan, it's a set price.  Once paid, that's it (as long as you buy a plan that covers everything - otherwise whoever organises your funeral may have to find some extra money).

If you're thinking of these awful over-50 plans that get advertised on the TV, don't go near those!

jimpwarsop

collinsca said:

"Premiums are payable for life and you could pay more in than is paid out on death."...... "Because the amount it pays out is fixed, if you live a long time you may end up paying more for the plan than you'd ever receive."
Many thanks!

A  pay monthly plan.  Bad idea.

As you say you will pay forever, say £20 a month for thirty years £7200. Sum assured ? Say £5k.

What do you think £5k will buy in 2051 ?

If you dont have any I suggest £25 a month into premium bonds.

Technosaurus

As others have said, there are two different things being talked about here...

1) A 'Funeral plan'. You pick what you want with a Funeral Director, they give you the price, you pay it, and then your next of kin 'redeem' it when you die. As people have said above, there are pros and cons to this depending on your age. The funeral director may offer some sort of 'payment plan' to pay for it in instalments but there's always a clearly defined end point - think of it as buying a 'voucher' for your next of kin to use for your funeral when you're not here. 

2) "Life cover". These are where you potentially pay for years on tick for a low 'sum assured', but are just life insurance products. They are marketed on daytime TV as "being able to cover the costs of the funeral" but they are not funeral plans, they are life insurance, just like what most people get when you get a mortgage but with smaller numbers. Your next of kin get a cash sum and can spend the whole lot on a new kitchen if they want, there's nothing saying it has to go towards funeral costs, that's just how they are marketed (and I would concur with Mojisola's review of such products!)

collinsca

Spendless said:

My Mum took one out on my Nan 6 years ago . I'm a bit confused by your 'you pay forevermore' as this wasn't what they did. It certainly cost at 'tomorrow's prices' but since Nan has lived 6 years since it was bought , a funeral today would be pretty much in line with what the policy cost (£5k). There are some things it doesn't cover, as explained in one of your links, but there's no ongoing fee they pay.  

As per other responses, you pay in forever. If you found a plan that didnt do this then it would be great to know what that was. thanks

collinsca

Thanks for all the responses, i will give careful consideration to all the points and may come back after i have digested thoughts. thanks again

collinsca

I appreciate it looks like my understanding is incorrect then from the responses i.e. there IS a fixed endpoint you stop paying premiums. (apologies @spendless)

However thats what i interpreted from this site... regarding what i have put in bold, this is what is says here:
https://www.moneysavingexpert.com/family/death-plan/ under 'Weigh up whether an over-50s' plan is really worth it' it says.. "Premiums are payable for life and you could pay more in than is paid out on death."
"Because the amount it pays out is fixed, if you live a long time you may end up paying more for the plan than you'd ever receive."

if this is misleading, can we feed this back?
OR have i misinterpreted this!?

McKneff

10 years ago my hubby and I paid £6k for two funerals. This covered all the necessaries.  All planned
Nothing more to pay.  Unless there are extras ordered at the time. 
We don't even think about it now