Prepare for the known

It happens to us all eventually and even death comes with a big bill these days. But there are ways to cover it – and ways to choose the funeral you want, where you want

The average funeral now costs just under £3,100, up 61 per cent in less than eight years, according to the 2011 annual Cost of Dying report from Sun Life Direct.

“By entrusting their end-of-life plans to their families, the state or no-one at all, many people are leaving their loved ones a very tricky financial situation particularly when you consider that nearly one in five people struggle with funeral costs,” says Simon Cox, head of life planning at Sun Life Direct.

But there are ways to plan for funeral expenses. You can simply save for your funeral, ideally using a tax-free product such as a cash ISA, or you can buy a pre-paid funeral plan. These cost £2,000-£4,000 and safeguard you from future rises.

“It means you are buying your funeral at today’s prices,” says Stuart Harland of the Funeral Planning Authority (FPA), the industry’s professional body.

Funeral plans are sold by funeral directors and organisations such as The Co-operative Funeral Care, Golden Charter and Age UK. The FPA oversees registered providers to ensure that the money paid by customers is safeguarded so that the funeral is provided in accordance with the plan bought.

If you do go for this option, check exactly what is covered. Some plans cover only funeral directors’ costs, such as staff or vehicles. Others cover disbursements – the fees paid by the funeral director for items such as flowers.

For example, Golden Charter’s £1,995 Easier Way Funeral Plan covers funeral directors’ services only, but its £3,390 Symphony Plan also includes some disbursements.

“If the funeral plan does not cover disbursements, the family can find that the total bill amounts to more than the funeral plan covers,” warns Harland.

Some plans cover only funeral directors’ costs such as staff or vehicles… others items such as flowers

Ask if you have to pay the total upfront or in instalments, and if instalments attract interest. Golden Charter, for instance, allows interest-free instalments up to 12 months, but charges interest for payments over longer periods. Some plans are tied to particular chains or directors, for example, the Sun Life Guaranteed Over-50 Plan. This guarantees the sum you receive, but does not include any funeral arrangements. Sun Life’s Simple Choice Funerals plan, however, was created in partnership with The Co-operative Funeral Care, and pays the proceeds direct to the funeral director.

With insurance plans, those who pay in for many years could find their premiums total more than the sum paid out. In some cases premiums must be paid until death, but in others premiums stop when you reach a certain age. Ask what happens if you die in the early years of the policy, too – usually your payout is reduced.

Whatever you choose, give your family full details about the plan, so they know who to contact when the time comes.

For more advice, see the funeral plans section on the government’s Money Advice Service website

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