Over the last ten years, growth in funeral costs has significantly outstripped inflation. Since 2004, the cost of the average funeral has increased by more than 70%. So are funeral plans a good option?
Pre-paid funeral plans offer an attractive proposition for those who want to be prepared. They allow you to pay for and organise your funeral in advance, while locking down the cost at today’s prices.
So far so good. Yet sadly, our research found that these plans aren’t always as good as they seem.
The creeping cost of funerals
Although all of the funeral plans we looked at guaranteed the funeral director’s costs in full, many plans did not cover important costs such as doctors’ fees, fees for a church, a minister, organists, a choir, grave digging and even a burial plot.
If you’re looking for a funeral plan to cover a burial, only the Co-operative and Family Funerals Trust offered to guarantee burial costs. However, neither included the burial plot, one of the priciest aspects of a funeral which costs on average £725, but potentially more.
The other providers offered a contribution towards costs in addition to those charged by the funeral director, which increase with the Retail Price Index (RPI). But even now, the cover offered is significantly lower than the average extra costs for a burial in 2012. If costs continue to rise, this cover will only become more inadequate.
However, if you want to opt for a cremation, funeral plans offered a much better deal. Age UK, Dignity, Family Funerals Trust and the Co-operative all offered to fully guarantee all core costs for a cremation, no matter how much they increase over time.
Are funeral plans worth the money?
We ran a survey of Which? members to find out what provisions they had in place to cover the cost of their funerals. Of those who had provisions, two-fifths said they’d put money into savings or investments, 28% had put into a funeral plan, 25% paid for life insurance, while 6% put into an Over-50s plan.
Each of these options has their pros and cons. For example, savings rates at the moment are averaging around 2.3% – a long way below the rate of inflation for funeral costs.
Have you opted for any of the options above to cover future funeral costs? Do you think these other products offer a better way of beating future funeral costs than funeral plans?