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Published on 01 November 2017 08:00 AM

Funeral plan sales have risen by 25 per cent in the last two years, with more people than ever planning ahead to avoid rising costs.

But Age Scotland warns there is still a lot of confusion about what constitutes a “good” or “bad” funeral plan, with some plans failing to cover all the expected costs.

The charity is urging prospective buyers to carefully consider different products and options, including Age UK Funeral Plans, before deciding to buy – and has produced new guidance on what to look for.  

Sales of plans have trebled since 2005, rising by a quarter since 2015. This huge growth may be due to more people recognising that a funeral is becoming increasingly expensive, making the advantages of funding it in advance, in full or in part, all the more attractive.

Buying a Funeral Plan is an important decision, and not one to be taken lightly considering the sums involved. It can make excellent financial sense but Age Scotland urges older people to carefully examine the affordability of the various Funeral Plans available and weigh up the options.

Funeral plans are not all the same, even if they may seem it at first glance. Some of the details within a plan can make a really big difference. Many funeral plans available offer varying levels of cover, service and, importantly, greater or less financial value.

Logan Steele of Age Scotland offers six tips and expert guidance you may wish to consider when purchasing a Funeral Plan:

1.    “It’s important to understand what is included in the funeral plan you decide on, and, especially, what costs are and are not covered. If you intend on having a cremation funeral, it makes sense to find a plan that guarantees to cover these costs, including the cost of the funeral director and any ministers’ fees. A plan that only provides a contribution to these fees – rather than a guarantee to pay them all – will in all likelihood leave a short-fall.

2.    “If you think you would prefer a plan or provider that makes a contribution to costs instead of guaranteeing to cover them all, it makes sense to consider checking the contribution increases each year are at least in line with general inflation or again, there may be a short-fall. The cost of funerals has in recent years increased considerably higher than UK inflation. No Funeral Plan provider will guarantee to cover all burial funeral costs in full, including that of buying the burial plot, but it’s still important to understand what is and isn’t guaranteed.

3.  “Hopefully a Funeral Plan won’t be needed until many years after it is taken out and over the long term, of course, commercial companies, such as funeral plan providers, can grow or decline. Therefore, it’s crucial to make sure the money you have paid in is maintained securely. It’s important to check with the provider that the funds in your plan are placed in either a trust fund or insurance policy that it is held completely independently of both the provider and funeral director. It’s important to make sure you ask the funeral plan provider where the money you pay will be kept before taking out the plan; you could even look at a copy of the Trust's Annual Report, which should be available on request.

4.    “It’s also worth checking what will happen if the Funeral Director you select isn’t available at the time the funeral is needed; for example if they retire or cease trading. Consider making sure you understand whether the guarantee would still be honoured in these circumstances and whether there could be any additional costs to pay. This is also relevant if you think you may move home and would like your funeral plan to move with you to a different funeral director.”

5.  “Don’t forget to compare the costs of different providers. This isn’t always as easy as it sounds but it’s important to consider any costs that the contributions specified will not cover. For example, a plan which only provides a contribution to third party costs cannot easily be compared to one which guarantees them.  In general, the fewer the guarantees, the more the next of kin are likely to have to pay at the time of the funeral. This will give you a good understanding of the value of each plan. And just as importantly, make sure you can afford the plan. If paying by monthly instalments it’s important to ask if they are over a fixed period or continuous payments for life. Continuous payments for life may look cheaper on the surface, but if you factor in how much you could pay in over your life time you could end up paying more in than you will get back.

6.  “Consider checking the funeral plan you are considering is an actual pre-paid funeral plan. There are of course other ways to pay for a funeral, such as from savings or the value of an estate. However, there are other financial products that are sometimes described as funeral plans in their advertising but are not as defined as such in law**. For example, whole-of-life insurance policies are often sold as “over 50s plans”, “50+ plans” OR even “funeral plans.” These are designed to provide funds towards the cost of the funeral when required, but they may or may not contain any arrangements for the conduct of the funeral and rarely guarantee to cover all of the costs. It is very important to make sure that any such product pays out at least as much as is paid in.”

Notes to editors
* Funeral Planning Authority statistics
** Articles 59 & 60 of The Financial Services & Markets Act 2000 (Regulated Activities) Order 2001
The Age UK Funeral Plan is provided in association with Dignity, one of the UK’s leading providers of Funeral Plans. An Age UK Funeral Plan is a great way of planning and paying for a funeral in advance. They are designed specifically for those in later life with a choice of plans and flexible easy payment options to suit different requirements. They can also help people in reaching decisions about the type of service they would like and other elements of their preferred funeral.
Age UK Funeral Plans
Age UK Funeral Plans is a product by Age UK Enterprises, a subsidiary of the Age UK Community Interest Company (CIC), the trading arm of the charity Age UK. Age UK Funeral Plans help take care of funeral costs and arrangements in advance. They are simple to arrange and have the following benefits:
•        Freeze funeral costs at today’s prices.
•        Arranging your funeral now will help save your family worry and money.
•        Guaranteed to fix the cost of the funeral services included in the Plan.
•        The funds for your funeral will be held securely in an Independent Trust Fund that is separately and expertly managed.
•    Guaranteed acceptance for anyone aged 50 or over.
•    No medical or health questions asked.
•    Flexible payment methods.
•    Allows family and friends to add their own special tributes when the time comes.
Age UK Funeral Plans are provided by Advance Planning Limited, which is part of the Dignity Caring Funeral Services group, owned by Dignity plc. Age UK Funeral Plans are designed specifically for those in later life and offer flexible Plans and payment methods to suit different requirements.
Dignity is a major provider of funeral services in the UK and the leading provider of pre-arranged funeral plans.  
Dignity Pre Arrangement Limited ISO 9001:2008 accredited company status. Dignity is a member of the Funeral Planning Authority, the professional body that oversees the operation of registered funeral plan companies.

For more information: Contact Richard Baker, Policy & Communications Manager on 0333 32 32 400