Along with planning a funeral comes paying for the big day. Paying is not a huge problem as dozens of businesses out there are vying for your patronage – and the cash in your wallet, of course.
So here’s a quick run down of what’s available in the US and UK for prudent savers sorting out their affairs.
Almost all funeral homes, funeral directors and organizations working with the over 50’s are affiliated to some sort of scheme or run their own.
The points to check are:
- The money you pay in is protected – check out the small print to see if your contract is honored if the funeral director goes out of business or prices go up;
- If you’re paying in to a scheme for some years, make sure you are not paying in more than you need to cover the cost of your own funeral;
Many families, especially in the US, find that the funeral plan someone has paid in to for several years doesn’t cover the cost of the funeral and they have to put in extra cash on account of excuses like ‘We no longer stock that casket model and the equivalent price of the model we now stock is $500 more”.
This does not mean all funeral plans are scams – it just means that like any other financial contract, you should read the small print before signing up, so you know exactly what the deal is.
Some funeral plan providers, like Age Concern a British non-profit organization that assists the elderly, offer index-linked plans that guarantee to peg the cost of a funeral at current prices.
The drawbacks of funeral plans are you do not have direct control of your own money and you are generally tied in to a funeral provider regardless of the chang- es in that business.
Another option for covering funeral costs is cheap life assurance cover. Many firms offer special policies regardless of age or health to cover funeral costs.
With these policies, at least you know the money is going to your family to cover funeral costs, and any excess remains with them.
Shop around before you lock yourself in to a policy, because the terms and condi- tions are different and you must make sure the cover offered matches your needs.
Laying away money to pay for your funeral in a savings account is a third option. In the UK, an individual savings plan in joint names is an excellent choice. Your savings grow tax-free and are accessible by the person you hold the account with come the day the money is required. You are in control of what you save and where, and know the other party will automatically have entitlement to the cash on your death.
Taking financial advice
Best advice for anyone saving for a funeral is to take independent financial advice before signing up with any plan provider to ensure your money is going where you intend.