More and more people want to secure the cost of their funeral, giving their families greater peace of mind when they die.
New research has suggested that record numbers of people are opting for pre-paid funeral plans.
The study from Golden Charter found that total sales of plans jumped 9% last year to 147,325. That's an increase of 12,000 on the previous year. As a result, there are now around 950,000 active plans in the UK, with pre-paid plans funding one in ten funerals each year.
What is a pre-paid funeral plan?
A pre-paid funeral plan ensures that you pay for your future funeral at today’s cost.
It’s taken out with a funeral plan provider or a funeral director and usually linked to a pre-selected style of funeral from that firm. So a basic package may not offer all the bells and whistles that you'd get with a more expensive comprehensive package. Let's look at the Post Office, which offers three levels of pre-paid funeral plan: Essential, Standard and Premium. With the Essential package you get a simple coffin, and there's no limousine to transport your family members. But with the Premium plan, there's a high quality veneer coffin and two limousines for your loved ones.
You can either pay it all upfront or in smaller instalments. But as with any instalment plan, the longer you pay, the more interest you’ll incur. Many plans will land you with a hefty fee if you cancel after the first month.
If you die within the first couple of years of taking out the plan, the money you've already paid in will be put back into your estate.
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Why we are turning to funeral plans
[SPOTLIGHT]The increased popularity of funeral plans is likely down to the rising cost of dying, according to Golden Charter. It highlighted reseach from AXA Sun Life which found that the average cost of a funeral is now more than £3,500, and increasing by 3% a year, easily outstripping the general rate of inflation.
By taking out a funeral plan, you can protect your funeral costs from the effects of inflation.
However, Goldern Charter also argue that many people are buying plans to ensure they have control over exactly how their funeral is conducted,
Things to watch out for with funeral plans
It's important to really do your research before taking out a funeral plan, as some parts of the funeral are not always accounted for, such as burials or cremation. However, certain providers will give you a fixed contribution towards these services under their plans.
Other restrictions may include no church service, limousine or the use of a chapel of rest. There may also be limits on how far the firm will travel to collect the deceased.
Funeral plans are not the only option. Some rely on their life insurance policy to cover their funeral costs, while others set aside savings. Read how to pay for a funeral for more.
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