A prepaid funeral plan means preparing your funeral arrangements by paying a monthly installment on a chosen funeral plan. These types of prepaid plans typically allow anyone aged over 50 (but as young as 18 with some) to pay for the arrangements of their own burial. This assists their family to have little financial and/or burial responsibility when their time comes.
The funeral covers many of the costs associated with arranging a funeral, such as purchasing a coffin and a hearse. According to the Financial Conduct Authority, funeral plans are currently not regulated. Circumstances that may arise could be that your service provider decides to close down and be out of business, you will not be able to get your money back, hence it is important that you check your provider and also be flexible about your plans.
Before choosing a funeral plan provider, make sure that it is registered with the Funeral Planning Authority. The FPA provides a non-compulsory regulation, where providers that sign up have to adhere to certain rules and a code of practice.
Upon the unfortunate event of death, your beneficiaries will receive the payout for the funeral arrangements according to the funeral plan you took out. Plans typically allow anyone aged over 50 (but as young as 18 with some) to pay for and set out the arrangements of their own or someone else's funeral now. A contract to pay for your
funeral in installments will take place by choosing a revocable trust. A deposit payment will be set out by your funeral director to an interest-bearing account. Upon death, the accumulated money may be taken out from the account by whomever you choose as your trustee and it can be used to prepare for your funeral.
A revocable trust will be able to pay for your funeral expenses in installments. A revocable trust is however a permanent trust that can change by the person who took out the plan. But once the plan has been taken out, the beneficiary is the only person who can make any changes.
According to The Balance, If you pass away within the first few years of the policy, there's a chance that the insurance company may not pay any of your funeral expenses. It is important to be aware that some instances of prepaid funeral plans may not pay out and could be various reasons. You also have to be aware that prepaid funeral benefits may be significantly lower than the premiums you have been paying over the years.
Understand that prepaid funeral plans can be a bit risky, there are alternatives to preparing for your death such as setting up a payable on death account. Budgeting and saving up for the necessary amount for your funeral could be reassuring for you and loved ones.
Make sure that money is available for your loved ones once you're gone. Ensure you have set aside written contracts on refund, agreements for the transfer of services. For more; speak to our experts today and get a quote now.