Post Office launches pre-paid funeral plans

Can you cut the cost of your funeral with a pre-paid funeral plan?

The Post Office has launched a new range of pre-paid funeral plans.

Pre-paid funeral plans help to pay for the essential elements of a funeral including cremation or burial, a Funeral Director, doctor’s fees, Minister’s fees, the coffin and transportation.

According to the latest annual SunLife Direct Cost of Dying Survey the basic cost of a funeral in the UK was £3,456 in 2013, up 80% since 2004.

The report predicts this cost to rise to £4,300 by 2018 so it’s not surprising that pre-paid funeral plans, which can secure an arrangement at today’s prices, have grown in popularity.

According to the Funeral Planning Authority (FPA) 135,000 pre-paid funeral plans were sold last year compared to 46,000 in 2002, a rise of 190%.

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So clearly there is a growing appetite for pre-paid plans. So what can the Post Office offer?

The Post Office plans

The Post Office is offering a choice of three levels of cover: Essential, Standard or Premium. They are available to anyone over the age of 50.

Payments can be made in one lump sum or broken down into 12 or 24 monthly instalments. If you choose to pay over 12 months there is no additional charge, but if you go for the two year payment plan there is a 6% charge on top of the original price.

Below is a breakdown of the costs.

For the price of a plan you get a selection of guaranteed services which your family are most likely to need when you die. This is outlined for each package below.

*If burial is required, the Post Office won’t guarantee the full cost. Instead a £1,220 contribution, which rises in line with inflation, is offered towards burial fees.

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As you can see there is one significant clause across all three plans: costs won’t be guaranteed on burial.

The Post Office says this is because burial is expensive, which is no exaggeration.

Last year the GNB trade union published a damning report into the cost of being buried or cremated in the UK. It found councils were charging a premium for being put in the ground.

Read The most expensive places to be buried for more.

So commonly pre-paid funeral plans include a set contribution for burial, which rises in-line with inflation, rather than guaranteeing to pay for the full cost.

How the Post Office compares

Below is how the Post Office compares on basic pre-paid funeral plans.

N.B All providers offer a hearse, guidance on registration and certificate of death, arrangement and supervision of the funeral by the funeral director and a basic coffin.

(a) Includes online discount of £100

(b) Does not include grave plot purchase

(c) 24 hour collection

(d) During business hours

(e) From home/funeral home/church to crematorium/churchyard/graveyard/cemetery

(f) Contribution increases with Retail Price Index

(g) To crematorium or burial site

(h) For plans that cover burials call provider for details

(i) To crematorium

(j) Embalming not included

(k) Includes online discount of £50

As you can see the Cooperative’s Bronze plan offers the best value on basic deals. It offers the cheapest plan and guarantees both the cost of cremation and burial.

The Post Office is one of the most expensive for basic plans. However, it is more competitive when compared with mid-range and premium deals, so is still worth a look.

Alternatives to pre-paid funeral plans

A pre-paid plan can remove the burden of planning and paying for your funeral from your loved ones, fixed at today’s prices and is exempt from your estate for Inheritance Tax purposes.

But these plans won’t be for everyone.

Many exclude services you would have thought would come as standard like paying for the full cost of burial or cremation. There’s also a large upfront cost to consider.

One alternative is to take out a life insurance plan. This can pay for your funeral and also provide money for your loved ones after you have gone. However, if you are in bad health premiums can be expensive.

Those in bad health could try an over 50s plan. You pay a fixed monthly amount so that your estate will receive a lump sum when you die. There’s a risk your payments end up exceeding the eventual pay-out, but these plans don’t require a medical check.

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