It may seem like an odd way to save money but pre-planning a funeral, whether it is for yourself or a parent could save you and your family thousands of pounds. At the end of the day it will happen to all of us so why not put plans in place that will relieve your family from the additional distress of having to worry about funeral arrangements and costs when the time comes.
The cost of funeral planning
Funeral costs have risen by around 7% over the last decade and now average more than £3,400. If this trend continues, a funeral could cost more than £6,000 in just 10 years time; not a small amount for anyone to find.
One funeral planning option available to you is a prepaid funeral plan which gives you the opportunity to put plans in place at today’s prices, therefore avoiding the impact of inflation; so no matter how much costs increase over coming years, it just won’t affect you.
Funeral Planning for the family
With most funeral plans there are no health or age restrictions, so you can put plans in place at an earlier age and then just forget about it. You can also buy a funeral plan for someone else, which often helps families make arrangements for their parents either because they have asked for help in choosing the right one; you manage their finances on their behalf or they are moving into residential care.
The last point is a real consideration as the money used to buy the prepaid funeral plan is not included in the means test which assesses whether a contribution to care fess will be made; which is why social services often suggest buying one.
Most plan providers offer a range of three types of plan; simple, standard and superior typically costing between £3,000 to £4,000.
If that feels like a bit too much of a stretch, you can spread the cost by paying in instalments or with a fixed monthly payment option some of plan providers now offer.
With instalments, you can usually choose to pay over 1, 3 and 5 years although anything beyond 1 year will incur additional administration fees. Costs range from £50 to over £300 a month depending on the level of service and instalment period and you will be covered for your services once the final payment has been made.
With the fixed monthly payment option you pay a lower premium, between £23 and £80 based on your age and the level of service you require, which is payable for life or until you are 90. You need to be between the ages of 50 and 80 for this payment option and are covered for your services after an initial period of between 6 months and 2 years, depending on the plan provider.
The Over 50 plan – an alternative solution to funeral planning
If you prefer to leave money to your family rather than put plans in place yourself, then an Over 50 Plan may be another option available to you. These over 50 life insurance plans offer guaranteed acceptance to anyone who lives in the UK and is between the ages of 50 and 80, with full cover after an initial period of between one and two years. There are no health questionnaires to answer or medicals as the state of your health is not taken into account.
An Over 50 Plan quite simply is an affordable and straightforward way of leaving a cash sum for your family which can be used to help pay for funeral costs. You will need to take into account though that as the cash sum is fixed, inflation will reduce its value and depending on how long you live, there is a chance that you could pay in more than the cash sum paid out.
This article was written for Money Saving Blog by Ashley Shepherd; Managing Director of Over50choices, a personal finance and comparison website for the Over 50s, authorised and regulated by the Financial Conduct Authority.