A guide to prepaid funeral plans

What are the key considerations if you’re looking to pay for and plan a funeral ahead of time? Graeme McAusland, of the Funeral Planning Authority, explains.

What is a funeral plan?

A funeral plan allows you to pay in advance for your own, or someone else’s, funeral. You can also discuss and decide what you want the funeral to be like. 

The plan is a contractual arrangement between you and a funeral plan provider that's responsible for arranging and carrying out the funeral when it’s needed.  

Funeral plan providers can be funeral directors, a subsidiary company of a funeral director, or a separate firm that makes arrangements with funeral directors to carry out funerals on their behalf.

How do funeral plans work?

You can either pay a lump sum for the main funeral costs, or pay a monthly fee that meets the agreed main funeral costs.

Plans will have a short period, usually between 14 and 30 days, during which time you can cancel and receive a full refund, but after that period, any cancellation is likely to incur a cancellation charge. Make sure you are aware of what that is as part of your considerations around buying the plan.

When you pay for your funeral plan, the provider has to set aside the money to pay for the funeral into a separate trust fund, or an insurance policy. Importantly, the provider does not hold your money. This ensures that the money to pay for the funeral is protected if the provider was to fail, and that there are safeguards to make sure there is enough set aside to pay for your funeral.

When the time comes, your family and loved ones will need to notify the plan provider, and they will carry out your funeral as specified in the plan

What is the FPA’s role when it comes to funeral plans?

The Funeral Planning Authority (FPA) was set up to protect customers who buy prepaid funeral plans. We do this by rigorously checking that providers that are registered with us:

  • adhere to our strict rules and code of practice
  • are treating customers fairly and respectfully
  • are giving customers the funeral they have paid for, when they need it

We are the only organisation that regulates funeral plans in this way.

At present, around 95 per cent of all new plans are sold by FPA-registered providers. We recommend that customers only buy plans from registered providers, as those not registered with us are not subject to the external and objective checks we carry out. Funeral plans are an important purchase, and we don't want any customer’s funeral to be put at risk.

Key considerations when buying a funeral plan

Shop around

Think rationally about what you want your funeral plan to include, and consider this when comparing the cost of one plan against each other.

A cheaper plan may not include something which is important to you, such as embalming, so be mindful about making decisions based purely on cost. You should also be clear on how third-party costs or disbursements work under the plan you are considering.

Discuss the plan with your friends and family

When you’re in the process of choosing a plan, talk to your relatives and friends about it, and make sure they know what’s going to be included, and the exact details of who you’re purchasing the plan from.

Also make sure they know where you’re going to keep the paperwork. This makes things easier for them in future when it comes to carrying out your wishes. We offer a ‘plan trace’ service for families who think their loved one had purchased a plan but are not sure where from. This service is free to use and is available on our website, but only covers our registered providers.

Think about how you’d like to pay for the plan

Whether you choose to pay in a lump sum or instalments, ensure that you select the option that best suits your circumstances. Avoid paying in cash, as there is then no record of your purchase, making it much harder to trace.

Check the paperwork

Once you’ve chosen and paid for your funeral plan, make sure that you thoroughly check the paperwork, and that it matches what you’ve discussed with the provider. Also make sure that you understand the terms of the plan, for example, what happens if you move to a new house.

You will need to let your provider know if you do move, but there could also be additional cost implications. 

Choose a registered provider

Funeral plan providers registered with the FPA must adhere to a rigorous set of rules and code of practice. Non- registered providers are not subject to any external checks, and if you buy a plan from them, you could be putting your money and your funeral at risk.

There is a list of registered providers on the FPA website, but if you check this and you’re still not sure, you can email information@funeralplanningauthority.co.uk.

About the author

The Funeral Planning Authority (FPA) is an organisation set up by the industry to regulate providers in the UK prepaid funeral plan industry. 

Image: Getty images