Beware of expensive exclusions in funeral plans

With the cost of the average funeral increasing by over 70% since 2004*, funeral inflation is now higher than any current savings rate, so are prepaid funeral plans a good option? Which? has found there are some expensive exclusions which people should be aware of when signing up.

Which? analysed a range of funeral plans from the key providers:

·  Although all the plans guarantee to cover the funeral director’s costs in full, many funeral plans, particularly for a burial, do not fully cover other important costs like the doctors’ fees, and fees for church, minister, organists, choir, grave digging and burial plots.

·  Most funeral plans make no contribution towards optional items such as the venue or catering for a wake, family flowers or a memorial.

·  Only the Co-operative and Family Funerals Trust offer to guarantee burial costs, but neither include the burial plot, one of the priciest aspects of a funeral which costs on average £725, but potentially more.

·  Funeral plans can be a better option if you are planning to be cremated as Dignity, Age UK, the Co-operative and Family Funerals Trust all guarantee to cover the core costs of a cremation.

·  A funeral plan from Dignity and Age UK sold in 1998 would have left relatives with an average shortfall of £1,200 in 2012 if a burial had been chosen.

The Financial Conduct Authority (FCA) does not regulate funeral plans, although people’s money is protected through the Financial Services Compensation Scheme (FSCS) if their funeral plan is in trust or uses life insurance. There are no regulations covering the sale of funeral plans, including whether the plan is suitable for the individual, and there are no guarantees that the money paid in will cover funeral costs if a provider goes bust. Which? wants funeral plans to be fully regulated by the FCA to make sure the product is sold properly and that people get the services they paid for.

Which? executive director, Richard Lloyd, said:

“People should make sure they are fully aware of any exclusions that apply before investing money in a funeral plan, to ensure your loved ones are not left with an unexpected hefty bill.

“We also want to see funeral plans fully regulated by the Financial Conduct Authority to make sure people get what they paid for.”

– Ends –

Notes to editors:

*According to Sun Life Direct

1.    Which? assessed 21 funeral plans from Funeral Planning Authority (FPA)-registered providers, in May 2013. The FPA sets standards of professional conduct, and sets out arrangements for resolving disputes if you have a complaint.

2.    Many of the plans will pay out a contribution towards the funeral costs (other than the funeral director’s costs which are covered in full) Some of this can be used to pay towards the cost of a burial plot. However these contributions, ranging from £899 and up to £1,150, are still significantly lower than the average burial costs which were £1,624 in 2012.

To view the full investigation, please visit the downloads section