Funeral plans: how they work and what to check

Paying for your funeral in advance can take a burden off the people you leave behind. But funeral plans vary a lot, and a plan that looks complete can leave your family with bills to pay. This guide explains how plans are regulated, what they usually cover, how to check a provider, and the alternatives, so you can make an informed choice. We don’t recommend particular providers.

Key points

• Funeral plans have been regulated by the Financial Conduct Authority (FCA) since 29 July 2022. Only authorised firms can provide them.
• Check the FCA register before buying. The provider must have permission for funeral plans.
• The FCA has banned cold calling for funeral plans and commission to intermediaries.
• You get a full refund if you cancel within 30 days. After that, only a reasonable charge should apply.
• Plans rarely cover everything. Third-party costs such as burial plots, celebrants, flowers and wakes are often excluded or only partly covered.
• Alternatives include a dedicated savings pot or over-50s life insurance, and each has trade-offs.

What is a funeral plan?

A funeral plan (also called a prepaid or pre-need plan) is a contract to provide a funeral in the future, paid for now. You can pay in a single lump sum or in instalments. The money is held in a trust or backed by an insurance policy, as the regulations require. When you die, your family contacts the provider, and the funeral is arranged using the plan.

Most plans cover the funeral director’s services. Many also cover some or all of the cremation fee. Burial is harder to prepay because grave prices vary so much. Plans range from a simple direct cremation to a full attended funeral.

How funeral plans are regulated

Before July 2022, funeral plans were only lightly regulated. Now, under FCA rules:

• Every provider must be authorised by the FCA to carry on funeral plan business.
• Cold calling is banned, and there are standards for advertising.
• Commission to intermediaries is banned, including to funeral directors who sell plans for a provider.
• Instalment plans must deliver a funeral once the moratorium period (up to two years) has passed. If the plan holder dies within it, a full refund must be offered.
• You can cancel: there is a full refund within 30 days, and after that only a reasonable charge. For instalment plans, the free cancellation period is 30 days or the moratorium period, whichever is longer.
• Complaints can go to the Financial Ombudsman Service if the firm doesn’t resolve them.
• If an authorised provider fails, the Financial Services Compensation Scheme (FSCS) aims to arrange a replacement plan or pay compensation.

How to check a funeral plan provider

1. Search for the firm on the FCA’s Financial Services Register (the FCA Firm Checker).
2. Check it is authorised and has permission for funeral plans. It should be able to both enter into funeral plan contracts and carry them out.
3. If the seller is an appointed representative, check that its principal firm is authorised for funeral plans.
4. Be wary of anyone who contacts you out of the blue. Cold calling is banned.

If an older plan’s provider no longer appears on the register, the plan may have been transferred to another provider or wound down. The FCA says the National Association of Funeral Plan Providers offers a tracing service.

What plans usually cover, and what they often don’t

The key question is whether third-party costs are guaranteed (paid in full whatever they cost in future) or given as an allowance (a fixed sum, with your family paying any difference). Ask for this in writing.

Questions to ask before buying

• Is the provider FCA-authorised for funeral plans?
• What exactly is included, and what isn’t? Is any of it an allowance rather than guaranteed?
• Can my family choose the funeral director and the crematorium or cemetery?
• Are there any extra fees, for example for administration, transfers or mileage?
• What happens if I move house, or die abroad or far from home?
• How do I cancel, and what would it cost after 30 days?
• For instalment plans: how long is the moratorium, and what happens if I miss payments?
• How will my family know about the plan? Give them the paperwork and tell them where it is.

Alternatives to a funeral plan

A dedicated savings pot. Putting money aside in an easy-access savings account keeps you in control. Your family can use it for any type of funeral, and the money earns interest. The downside is that it isn’t locked to today’s prices, and it could be used for other things. Banks can usually release money from a deceased person’s account to pay a funeral director’s invoice directly.

Over-50s life insurance. These policies usually guarantee acceptance without medical questions, in return for a fixed monthly premium, and pay a fixed lump sum when you die. Things to understand:

• The payout is set when you buy the policy and usually does not rise with inflation, so it may not cover a funeral in future.
• You could end up paying in more than the policy pays out, especially if you live a long time.
• There is often an initial period, commonly the first year or two, when only the premiums paid are returned if you die.
• If you stop paying, cover usually ends and you may get nothing back.

MoneyHelper, the government-backed guidance service, warns that over-50s plans can be an expensive way to plan for a funeral. It suggests comparing them with saving.

Life insurance or pension death benefits you already have may cover funeral costs. Check the policy details.

Writing down your wishes costs nothing and is always worthwhile. Record whether you’d prefer burial or cremation, any faith requirements, music and readings, and how you’d like to be remembered. Store it where your family can find it, not only in your will, which may be read after the funeral. Our guide to recording your funeral wishes compares a will, a letter of wishes and a funeral plan.

If you are arranging a funeral and find a plan

Contact the plan provider as soon as possible, ideally before you instruct a funeral director. The provider will tell you which funeral director can carry out the plan and what is included. Keep a record of anything extra you agree to pay. If money is tight, see help paying for a funeral. A plan reduces the Funeral Expenses Payment and the Funeral Support Payment.

Next steps

• Understand today’s prices in funeral costs in the UK.
• Compare direct cremation and cremation vs burial.
• Browse funeral directors near you. Many will talk you through pre-planning without obligation.