If you’re looking for a way to make your own funeral arrangements in advance, a funeral plan might be the answer – and could even save you and your family money. But what is a pre-paid funeral plan, exactly, and are they really worth it?


What is a funeral plan?

A pre-paid funeral plan is a simple way to arrange and pay for a funeral ahead of time. This can ease a lot of the stress and financial worry of arranging a funeral, protecting your family from paying higher funeral costs in the future and making your own wishes clear.


How do funeral plans work?

You can buy a funeral plan either from a funeral plan provider or from a funeral director, paying up-front or in instalments. The money goes into a trust fund or insurance policy, which will be used to pay for the service when the time comes.

Depending on where you buy your funeral plan, you might be asked to choose between different packages. A higher cost package might include (for example) more funeral cars, a more decorative coffin, more money set aside for third party costs and potentially more flexibility with the time and date of the funeral.


What does a pre-paid funeral plan usually include?

What is a funeral plan supposed to include? They don’t typically cover all funeral costs, as not everything will be under the plan provider’s control. But most will include:

  • The funeral director’s fees. This would usually include collection of the person who has died, conveying them to the funeral, the organisation of the funeral service, paperwork and basic care of the person who has died (washing them and dressing them, for example).
  • The coffin. This could be a simple, inexpensive cardboard coffin or a more elaborate wooden casket.
  • The hearse, and (optionally) additional funeral transport. Basic plans will usually include the cost of hiring a hearse to take the person who has died to their funeral, and on to the cemetery or crematorium. You may also be offered extra funeral cars or limousines for the family at an additional cost.
  • A pot of funds set aside for disbursements. Disbursements are third-party services: things that the funeral director can’t provide, like the flowers, cremation or burial plot. Most funeral plans will set some money aside for these things, although the amount can vary quite a bit and depends how much the funeral plan is.
  • Administration fees. Most providers will take an administration fee for their work in setting up the plan. At Beyond the fee is £195, but some providers will charge as much as £1,000.
  • Cancellation fees. Some plan providers will charge you if you want to cancel your funeral plan later on (although cancellation of a Beyond Open Plan is free).

It’s important to check the fine print of any funeral plan you buy to be sure of what’s covered and what isn’t.

Remember: Your family may have to pay some additional funeral costs, as the amount set aside for third party services might not cover everything they’d like to arrange.

Also, if the cost of third-party services like cremation and burial increases more than the plan provider anticipates, the amount you’ve set aside could potentially fall short. However, your family will still pay less than they would have without a funeral plan.


How much is a funeral plan?

Costs vary depending on whether you buy a basic funeral package or opt for something more expensive. Looking at the 10 most popular providers, mid-level funeral plans are usually between £3,000 and £4,000.

The cost can be covered by a lump sum or in a series of instalments over many years, paid to the plan provider or funeral director.

You might end up paying interest on the outstanding amount if you choose to pay via instalments. This interest is used to account for funeral cost rises and is fed back into your plan.


Is my money secure in a funeral plan?

Funeral plan contracts are regulated under the Financial Services and Markets Act 2000. However, the funeral plan contract is exempt from this if the plan provider safeguards the money by either:

  • paying the money into a whole of life insurance contract; or
  • holding the money in trust for the purpose of paying for the funeral

Most funeral plan providers operate in this way and as such do not have to apply to the FCA to become an authorised firm for funeral plans. However, many funeral plan providers are members of the Funeral Planning Authority, and voluntarily abide by FPA rules and their code of practice.

If you make a funeral plan with Beyond, your money will be placed either into a trust fund with independent trustees, and then kept until needed to pay for the funeral.

If you are paying the bill upfront, you could consider paying for a portion of the bill using a credit card, as this gives you a greater level of protection under Section 75 of the Consumer Credit Act.

If you are paying in instalments, you would need to pay at least £100 of the bill upfront to receive this extra protection, and you can then pay the rest off gradually.


Questions to put to your funeral plan provider

If you’re interested in buying a pre-paid funeral plan, the questions you should ask a provider are:

  • What costs are not included in my funeral plan?
  • Is it possible to cancel or amend the plan if circumstances change?
  • Are there any cancellation charges?
  • What happens if there are outstanding payments at the time of death?
  • Do I have to use a certain funeral director or company?
  • Can the family make changes to the funeral if they wish to?
  • What happens if the death happens abroad?
  • If there a clear complaints procedure?
  • Where is my money invested?


What are the alternatives to a pre-paid funeral plan?

  • Life insurance policies

An over-50s lifelong protection, more commonly known as over-50s life insurance, will pay out an agreed amount at the time of death. This means that it can go some way to cover funeral costs, depending on how comprehensive your cover is.

If you choose this option, it’s best to have the policy ‘written in trust’, which helps to define how the insurance pay-out is used, and will speed up the time taken to process the claim.

  • Savings accounts and investing money

Most savings accounts don’t earn much interest at the moment, but you can always set aside a portion of your savings to go towards funeral costs. Other alternatives, such as investing money and putting cash into an ISA can help towards funeral costs.

Any money held in a bank account will be automatically frozen and become part of your estate, unless held in a joint account.

  • Paying from your estate

Relatives can pay for your funeral out of your estate, and this money will not be subject to inheritance tax. To release funds, the executor of the will or a close family member will usually need an itemised bill from the funeral home and the death certificate.

Alternately, if an estate administration professional has been appointed, they can handle retrieving money from the estate.

You can also write a record of what your preferences are for the funeral, saving your loved ones the stress of many difficult decisions. This information can be included in your will or kept somewhere secure with other important documents in your home.

Print this guide
wills banner gosh help centre