A H Freemantle reveals the 7 things you must know before you take out a funeral plan

Funerals are expensive. At short notice families must find thousands of pounds to provide for a ‘traditional’ send-off, so it makes sense to put money aside in case.
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Published 21st Nov 2019, 00:00 BST
Updated 21st Nov 2019, 12:56 BST
James Keen, managing director of A H Freemantle Funeral DirectorsJames Keen, managing director of A H Freemantle Funeral Directors
James Keen, managing director of A H Freemantle Funeral Directors

In the past few years, people have approached us who, we feel, have been mis-sold financial funeral products.

The funeral planning and insurance markets are large, with over 200,000 financial products taken out each year. This means big business for large companies.

Pre-paid funeral plans and insurances are supposed to safeguard your money until it’s needed, ensuring that it’s used to provide the funeral you wish for. But buyer beware!

A H FreemantleA H Freemantle
A H Freemantle

Funeral plans are not regulated by the Financial Conduct Authority (FCA) or any other statutory regulator. Even though a pre-paid plan resembles an insurance product, providers are exempt from regulation by putting customers’ money either into a trust or a ‘whole of life’ insurance policy.

The vast majority of – if not all – providers make use of this exemption. This also means consumers are unable to complain to the Financial Ombudsman Service and have no protection if a provider goes out of business.

Taking out a funeral plan means the consumer either pays a lump sum or instalments to the plan provider. Your money is invested into a trust fund with trustees, typically in a predominantly cash fund. Administration charges are usually upfront.

An insurance policy, sometimes known as Over-50s plan, is usually monthly payments to the insurance company, providing a given lump sum of cash when the time comes. This sounds straightforward, but the policy is closed if any payments are missed, and no money is payable by the insurance company.

If the person lives a long time, far more may be paid into the policy than it will eventually pay out.

Therefore, here are seven points you must know:

- If there are cancellation charges

- Exactly what is included, and what is not

- How to cancel it if the need arises

- If you can choose your funeral director

- Coverage if the person dies overseas

- Interest charges when paying by instalments

- Cover if there are outstanding instalments at death

Funeral plans are heavily advertised and easily bought. I would urge anyone considering a prepayment plan to discuss the matter with their chosen funeral director, who is more likely to have your best interests in mind.

A H Freemantle recommends Golden Charter Funeral Plans. For information and advice, call 01329 842115.

By James Keen, managing director of A H Freemantle Funeral Directors