/ Best way to cover funeral costs?

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pasbury 09 Aug 2019

A question raised by my elderly parents today. Uncomfortable but unavoidable.

They’ve been offered a funeral plan by a company called Capital Life, it involves a £63 a month payment for 6 years (both parents are 88).

Strikes me as a savings account with a bit of added insurance against the rising costs of funerals.

They were cold called which always makes me very suspicious.

I always thought that that is part of what life insurance was for?

Any knowledge?  it’s not something I’ve though about much but the time has come.

profitofdoom 09 Aug 2019
In reply to pasbury:

> A question raised by my elderly parents today. Uncomfortable but unavoidable.

> They’ve been offered a funeral plan by a company called Capital Life, it involves a £63 a month payment for 6 years (both parents are 88).

> Strikes me as a savings account with a bit of added insurance against the rising costs of funerals.

> They were cold called which always makes me very suspicious.

> I always thought that that is part of what life insurance was for?

> Any knowledge?  it’s not something I’ve though about much but the time has come.

I suggest two important factors are [1] how much will be paid out in the event of death, and will there be payments to cover both funerals? and [2] what is the period in which they will not be paid in the event of death - the first year? The first two years?

Also if this was me or my parents I would just put the money into a savings account, to be used in the event of death

Bob Hughes 09 Aug 2019
In reply to pasbury:

How much are you planning to spend ? Serious question. My dad died a few years back and we did the funeral really pretty cheaply. I forget exactly how much but not the kind of money you’d need finance for. 

AJM 09 Aug 2019
In reply to pasbury:

It is life insurance, isn’t it? In this case possibly you get some sort of inflation protection as well, if what you get is a funeral of some sort of fixed level of detail/quality rather than a lump sum, but basically you pay a premium, and when you die you get some sort of benefit back. I claim no great expertise on the customer regulation (I work for an insurance company, but my role is basically back office nerding so I don’t know much about the regulation of the selling), but it wouldn’t surprise me if there’s an insurance company in the background somewhere.

Whole of Life insurance is a sort of savings plan, on average - since everyone (who doesn’t cancel) is guaranteed to get a payout at some point, on average the premiums basically have to cover the payout (with investment returns, and minus expenses, and lots of other complexities). But it can look massively different to a savings plan if you’re one of the people who die early or late. My assumption would be that you still get your funeral if you die before 6 years are up, and therefore that you get that protection as well as the cost protection that you mention.

elsewhere 09 Aug 2019
In reply to pasbury:

My uncle swears by Golden Charter Funeral prepaid plans. Worked well for a couple of relatives who followed his advice.

MG 09 Aug 2019
In reply to pasbury:

I'd echo the how much will you/they spend question. Is it really needed? If their estate is more than very small, I doubt it's worthwhile or needed

pasbury 09 Aug 2019
In reply to profitofdoom:

Good points, I had only a short time to view the documents they’d been given and couldn’t see any clauses on early death I.e. during the payment period and what would be paid in those circumstances (and let’s face it as they are both 88, that is a calculation that has to be faced).

I think the savings account route is better.

pasbury 09 Aug 2019
In reply to Bob Hughes:

> How much are you planning to spend ? Serious question. My dad died a few years back and we did the funeral really pretty cheaply. I forget exactly how much but not the kind of money you’d need finance for. 

I will look into this. Their wishes are clear so should be easy.

pasbury 09 Aug 2019
In reply to AJM:

The product they have been offered by a cold caller is not life insurance as I understand it.

pasbury 09 Aug 2019
In reply to elsewhere:

> My uncle swears by Golden Charter Funeral prepaid plans. Worked well for a couple of relatives who followed his advice.

Thanks, I’ll check this out.

AJM 10 Aug 2019
In reply to pasbury:

I had a quick look and you're right, it doesn't look to provide any real early death protection (you have to top up the balance, from a quick look - in the FAQs), which at 88 does leave it looking like maybe the main benefit over a savings account is the inflation protection, set against the extra costs you probably occur in their fees etc.

summo 10 Aug 2019
In reply to pasbury:

That's £4500 each which is more than it costs for a funeral. An insurance company is only running the scheme to make a profit they aren't a charity. Just bank the cash every month in the best savings fund or isa available. 

neilh 10 Aug 2019
In reply to pasbury:

If the company goes bust what happens to the money?

funeral plans are a waste of space. 

Tuck the money into a savings account and make sure you have access to it  

GrahamD 10 Aug 2019
In reply to neilh:

Thats the key, if funeral costs really are an issue then immediate access to the funds is essential without having to go through probate.

Im amazed at how many adverts there are for funeral cover which presumably means they are lucrative for insurance companies. 

GrahamD 10 Aug 2019
In reply to pasbury:

Short term could you plus other relatives cover costs of a funeral before the wills are sorted ? If so tell them their funerals really shouldn't be their worry.

summo 10 Aug 2019
In reply to pasbury:

From my experience of being executor as long as there will obviously be sufficient funds to meet the solicitor and funeral directors bills, all parties are happy to proceed with the funeral and settle up afterwards. They don't require up front payment. 

Even if there are issues with insurance, property sales etc. they are also usually happy with a partial release of funds to those in the will prior to the final settlement, especially if it looks as though things could take several months to finalise. 

Post edited at 12:58
neilh 10 Aug 2019
In reply to GrahamD:

As summo says you do not have to go through probate. A good solicitor will be able to arrange for payments to settle funeral and other expenses , for example the cost of the “wake”.

elsewhere 10 Aug 2019
In reply to neilh:

It is ###not### a financial planning decision.

A funeral plan buys convenience for relatives as payments and ###decisions### have been made by the individual and not the grieving relatives.

 I think money held by major financial institution so similar risk to private pension or life assurance.

Can be good financial planning if paying care home fees in England. Council pays when assets dwindle to 17k. If plan paid for inheritance is 17k rather than 17k minus funeral.

17k may have changed now.

Post edited at 14:44
1
SouthernSteve 10 Aug 2019
In reply to summo:

> From my experience of being executor as long as there will obviously be sufficient funds to meet the solicitor and funeral directors bills, all parties are happy to proceed with the funeral and settle up afterwards. They don't require up front payment. 

That would be my experience too. You can very specifically state the nature of the arrangements in your will to ensure the executor has a clear mandate.

Post edited at 16:41
neilh 10 Aug 2019
In reply to elsewhere:

It’s a poor decision. For a start the funeral plan could go “ bust” and you might not get the money. 

Next you are tied into one provider.

as long as there is money in the pot it is quite normal for solicitors etc to make sure costs for funeral are covered. 

Its oversold as a concept and plays on people’s fears when there is really nothing to be concerned about.

in the end it’s your choice.

its a bit like PPI ... a scandal waiting to happen 

GrahamD 10 Aug 2019
In reply to neilh:

Slightly black humour, but i doubt many people will be checking whether they were mis-sold funeral cover.

wintertree 10 Aug 2019
In reply to pasbury:

Assuming they have the cash in the bank, from their estate.  Banks will normally pay funeral costs from the deceased’s accounts before probate.

When organising a funeral, the last thing I’d have wanted is to have to do business with a firm set up to profit from the elderly and vulnerable, and that probably has a shoestring budget for customer service...

elsewhere 10 Aug 2019
In reply to neilh:

> It’s a poor decision. For a start the funeral plan could go “ bust” and you might not get the money. 

It depends on the value the deceased put on not inconveniencing their relatives or whatever the criteria are. Their decision criteria may not be yours.

> Next you are tied into one provider.

Not true.

> as long as there is money in the pot it is quite normal for solicitors etc to make sure costs for funeral are covered. 

Solicitor? For a modest estate that barely covers the funeral? 

> Its oversold as a concept and plays on people’s fears when there is really nothing to be concerned about.

> in the end it’s your choice.

> its a bit like PPI ... a scandal waiting to happen 

Post edited at 18:20
summo 10 Aug 2019
In reply to elsewhere:

> Solicitor? For a modest estate that barely covers the funeral? 

I think in some instances the estate size is irrelevant. If you already have a busy home and work life, adding in losing a relative and being executor is potentially challenging. Whilst it can be worked through, it is also a potential mind field if anything out of the ordinary surfaces.  

If you have a local solicitor accustomed to dealing with probate, they already know all the local benefit, welfare and pension agencies, coroner and probably the correct bank address etc. to send death certs to and so on. Paying a solicitor can be money well spent. 

wintertree 10 Aug 2019
In reply to summo:

> Whilst it can be worked through, it is also a potential mind field if anything out of the ordinary surfaces.  

Came as a shock to me to learn that as sole executor I would be wholly and personally liable for any payments the estate would be unable to make that arose as a result of challenge(s) to the will/probate process.  

The main consequence of this was me refusing to pay a penny out of the estate until the challenge window passed, and my getting seemingly endless grief from people without sufficient patience for that window to close.  

It’s made me think twice about dying, I can tell you.  If my plans to significantly postpone that fail,  I plan to die penniless or at least without secret, estranged partners and/or offspring waiting to pop up and challenge the will.

summo 10 Aug 2019
In reply to wintertree:

Yes there is certainly some responsibility.

My uncle told me he'd put me down as executor, I just know it's going to be a nightmare when that day arrives. He has bank accounts and assets in two countries, a foreign wife, a step son etc. Etc. I'm hoping he will now leave her everything and not give anything to us nephews. 

Michael Hood 11 Aug 2019
In reply to neilh:

I've been saying this for some time, funeral protection plans are going to be the next PPI scandal.

You just have to see the number of TV adverts for them to realise that someone is thinking that there's good money to be made here.

So before getting a FPP, check very carefully so that you know exactly what you're getting.

Michael Hood 11 Aug 2019
In reply to wintertree:

As per "I intend to live forever or die trying".

Can't remember who (famous?) made that quote.

Doug 11 Aug 2019
In reply to pasbury:

We bought a prepaid package for my Dad a year or so before he died. Mostly to help reduce his savings to the level at which the local authorities would start to pay his nursing home fees - we had already used up most of the proceeds of selling his house on his care. For us it worked well, the only hassle was due to some hiccup in the admin system meaning it took much longer than normal to get a death certificate which delayed the funeral. Can't remember how much, my brother in law  looked after the paperwork.

neilh 11 Aug 2019
In reply to Michael Hood:

100% agreement

neilh 11 Aug 2019
In reply to elsewhere:

The first thing the government well the DWP asks you is have you got enough money to cover the funeral costs..

it really is easy to arrange and if necessary the State will step in and help.

there are not lots of bodies lying around waiting to be buried because there is no money..indicating the system works well.

so it’s not difficult and it’s not expensive.

the whole funeral protection plan business is another scam.

Post edited at 10:06
Bulls Crack 11 Aug 2019
In reply to pasbury:

It may not be appropriate for your parents' wishes but we recently used Memoria low cost funerals and found them dignified but without the mawkish faux sombreness which seems to pervade this industry.  My Dad had donated his body to medical science but  because it was out of term time they couldn't accept his bequeathal (annoyingly) so we opted for the least ceremonial option

Rob Exile Ward 12 Aug 2019
In reply to neilh:

Totally agree. IIRC funeral costs can be paid out of the estate before probate is agreed.

If your folks' estate won't cover the cost, well it's a bit late to start worrying and saving now, tell them to enjoy the money they've got now - worst case the DWP will pick up the tab.

dread-i 12 Aug 2019
In reply to wintertree:

>When organising a funeral, the last thing I’d have wanted is to have to do business with a firm set up to profit from the elderly and vulnerable, and that probably has a shoestring budget for customer service

There seems to be a bit of business around dodgy death services. Free will writing, but you are tied to companies that they specify to manage the estate. The families are grieving, the may not have anything to compare to and cant shop around easily.

OP:

If they can afford the £63 per month, or a lump sum, then a savings account would be the way to go. Set up a joint account with yourself and / or another family member as the account holders. Get them to pay into that and you have ready access to the money.

Trangia 12 Aug 2019
In reply to pasbury:

The whole purpose of a funeral plan is to fix the cost at today's prices. Funeral costs have been rising steadily over the last few decades. What would have cost say £2,000 5 years ago now costs £3,500. If you buy a plan now and the cost in say 10 years time has risen to £10,000, it's already paid for, your executors won't have to pay any more. I bought one with Pride Planning 2 years ago, and the money is underwritten by Barclays Bank if they go bust. When I die my kids won't have to worry about arranging or paying for the funeral. Just on phone call to them from by executor and they swing into action ringing a local undertaker and arranging everything. I've already told Pride Planning the type of funeral I want and what readings, music etc I have requested. It's all paid for and regardless of inflation the kids won't have to pay any more, even f funeral costs have risen substantially.

If you have beneficiaries, it makes sense to fix the price now if you can afford it.

neilh 12 Aug 2019
In reply to Trangia:

Do you really think that in 10 years time a funeral plan paying out about £3,500 is going to cover the cost in the future of £10,000  even if its with Barclays. Do you not smell the whiff of financial bull shit from organsisation that touted PPI etc.Do you not think that there will be fat commissions changing hands for the plan.Tucked away in the clauses will be getouts.

I suppose the only consolation is that you will not be around to find out if it works.

I appreciate you will not like me questioning it or saying this.

whenry 12 Aug 2019
In reply to neilh:

It depends how you look at it. If you are doing it to save money / as a form of insurance, then there are probably better ways of doing it (or at least it's sensible to be careful about your choice of provider). If you're doing it do reduce the value of your assets for getting care paid by the council, it's a valid option. Alternatively, if one takes this out with a view to planning your funeral yourself and to relive stress on your surviving family (as one of my great aunts did), then it's potentially sensible. She got the funeral she wanted and none of the family had to sort it out.

But in answer to your question, yes - I would expect a funeral plan to cover significantly higher costs than are current. Increases in price vs investment income for the company should be factored in.

neilh 12 Aug 2019
In reply to whenry:

I would seriously question a £3500 plan paying out £10k plan in 10 years based on investment income. that is one hell of a rate of growth. Especially after say 20% of that £3,500 will have been used to provide commission to the introducer at Day 1.so its £2800 to pay for 10K in the future.

At least go with the Co-op if you really want to go down this unregulated route with no real trade body with teeth. They are a bit more ethicial  and own their funeral services.

Michael Hood 12 Aug 2019
In reply to Trangia:

Nope, the primary purpose of a funeral plan is to make money for the providers. You getting a fixed cost is a secondary benefit, but assuming the provider has done their sums correctly, in order to create their profit, you will be paying more than what they think is going to be the average cost (adjusted over time).

Now of course, this is the same as any other insurance system, you're paying something greater than the average cost for some peace of mind. If you've looked at and understood all the small print, and you've got a reputable supplier, then that peace of mind may be worth the extra cost.

From what you've written it sounds like you're probably in that situation.

But, I suspect there are many operations out there that aren't completely reputable, or that have conditions that make things not quite as rosy as they seem.

Since PPI, there is a whole industry out there that basically sells the "latest" money-making wheeze. I think funeral protection is the latest iteration - tread carefully.

summo 12 Aug 2019
In reply to pasbury:

It seems some are combining the notion of a financial plan with that of having a written set of instructions of your funeral service and your estates will. They are 3 separate things, potentially actioned by 3 different people. 

 When Barclays pay out only £3.5k to partially fund a £10k funeral they won't care which music is played or which relative has to sort out the financial mess. 

I'd personally make proper provisions of the three independently and advise family members likely to still be alive where you keep the important documentation in the house. They will needed policy and account numbers etc.  

Post edited at 22:11

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