Funeral Plans vs Alternative Products
There are a number of common options for you to consider when planning what will happen when you pass away. The decision you make should ultimately be dictated by what you are trying to achieve. Put simply, if your aim is to ensure that the costs associated with your funeral are met, no matter how far it is in the future or how much prices have increased, then a pre-paid funeral really is the only option for you.
A Funeral Plan Is Guaranteed
As you will have no doubt read online or perhaps even seen on the national news, the cost of a funeral is rising by a staggering 8/10% every year! To put this into perspective, that means if current trends continue the average cost of a basic funeral could be £4,620 in 2020*. A further alarming statistic is that 1 in 10 households within the UK will go into debt as a result of having to find enough money (within a short space of time) to cover the cost of a loved one passing away.
*SunLife Cost of Dying Report 2015
By having a pre-paid funeral plan in place, you can ensure that irrespective as to how much the cost of a funeral rises over time, your family and loved ones will never have to pay a penny more to cover the cost of your funeral directors services included in your plan. In addition, your wishes will be carried out as per your specific instructions, alleviating any further stress for the ones that you care most about.
Life Insurance Vs Funeral Plans
Life Insurance is designed to work very differently to a funeral plan and is certainly not a pound for pound replacement. Life insurance is great if you want to leave a "fixed" lump sum for your loved ones, however, there are a number of reasons as to why it isn't always suitable to cover the cost of your funeral:-
- Life insurance pays out a fixed sum of cash and doesn't track the rising cost of a funeral. It is possible that when you pass away the cost of a funeral may exceed the amount that you are insured for.
- Acceptance is often subject to health checks, whereas a funeral plan is not.
- Life Insurance may take some time to "pay out" or form part of your estate if not properly written into trust. A funeral plan is activated immediately.
Over 50s Plans vs Funeral Plans
Over the years, Over 50s plans have been extremely popular thanks in part to the familiar face and reassuring voice of Michael Parkinson. However, more recently Over 50s plans have been heavily criticized and scrutinised by numerous different consumer interest groups (including Money Saving Experts' Martin Lewis) for simply put, not being very good!
Some of the more notable disadvantages of an over 50s plan:-
- You get a fixed sum which doesn't increase with inflation (so there's a very good chance that it won't cover the cost of your funeral).
- Most over 50s plan holders are continually topping up their plans throughout the lifetime of the policy.
- You must pay the policy for life and if you miss a single payment, you lose everything!
- You could very easily end up paying more than you actually get back.