UK Funeral Pre-Payment Market in Focus: Forward Planning

As prime time TV advertising and mainstream press coverage begin to remove the taboo of discussing death, people are increasingly seeking to plan ahead for their own funeral.  Tim McCracken of FMC & Sons explains the growing trend.

Historically the funeral market has been shrouded in mystery.  Funeral directors were simply seen as men in pinstripes, with black cars and wooden boxes, and there would be very little choice in how a funeral might be conducted.

However, today, with prime time TV advertising, mainstream press coverage and BBC Breakfast items, the mystique surrounding the profession is reducing, which brings with it more choice.  From eco-funeral options to motorcycle hearses, an increasing number of people are choosing to plan ahead with some form of funeral plan and spread the cost.

What are pre-payment plans?

A pre-paid funeral plan allows you to buy and organise your funeral at today’s prices.  You’ll pay either a lump sum or in instalments, and your money is then invested into a trust fund or an insurance policy.  The plan covers all the main costs of a funeral in advance, usually only excluding third-party fees such as the crematorium or wake.

Plans can be purchased through a funeral plan provider, which can easily be found on the internet or, as 60% of people currently do, through a funeral director.  Typically a funeral director will walk you through the process and create a tailor made plan, allowing you to outline your completely bespoke funeral in detail to your exact requirements. 

Alternatively when purchasing a funeral plan elsewhere you will be given a variety of ‘set’ packages at different price levels to select from.

Why buy?

112,700 funeral plans were sold in the UK across 2011.  Whilst this represents a 67% increase since 2007, it is still significantly behind sales in some European countries and the US.

But why are so many of us increasingly opting into these plans?  One of the main reasons is the reassurance that a funeral plan gives to relatives at an already testing time.  By outlining what you would like in advance you can ensure your funeral reflects your wishes, and relatives are spared the added stress of having to make all of the decisions.  All they have to do is make one phone call, and your plan can be put into action.

In addition, funerals are expensive, and the cost of dying is rising, outstripping inflation, often leaving relatives with unforeseen bills at a difficult time.

If they meet the required criteria, funeral plan providers can register with the industry’s self-regulatory body, the Funeral Planning Authority (FPA), whose members account for around 95% of total UK funeral plan sales.  The FPA imposes rules and a code of practice, adding additional security to the plan holder.  Therefore, it is important when buying a plan to check if the provider is a member to ensure your plan is protected.

Alternative options

Pre-paid funeral plans are not the only way to prepare for the future.  Whole of life (WOL) policies are also becoming increasingly popular.  However, where pre-payment funeral plans charge a lump sum (either in one go or in instalments) a typical WOL policy will charge a set amount per month indefinitely, meaning you may end up paying more in than you get out.  Rather than acting as a plan, these policies simply cover the costs.

The main motive behind any form of funeral plan, either WOL or a pre-paid plan, is peace of mind, so in order to ensure this is what you and your family receive, shop around and read the small print carefully before signing up to any deal.

Tim McCracken is a Director of FMC & Sons.  As market leaders for consultancy services to the UK funeral industry for 20 years, FMC & Sons supports firms to ensure their services best reflect the changing needs and wishes of the people they service, and as a result has developed an unrivalled knowledge of the sector.

Tim can be reached on Tim.McCracken@fmc-online.co.uk or 01522 695 011.