Funeral Planning and Prepaid Plans
Funeral costs are among the least shopped expenses in most households, because the purchase happens under time pressure and grief. Prices for comparable arrangements vary substantially between providers.
Planning in advance addresses both the cost and the burden on family, who otherwise make decisions with no idea what you would have wanted.
What drives the cost
Burial is generally more expensive than cremation, largely because of the cost of the plot and interment.
Direct cremation — no service, no attendance, ashes returned afterwards — is the least expensive option and has grown considerably in popularity.
Within any option, the variables are the coffin, the vehicles, the venue, the number of staff, and third-party costs such as crematorium or burial fees, celebrant or clergy fees, and medical certification where applicable.
Third-party costs, sometimes called disbursements, are set by others and rise over time, which matters for prepaid plans.
Prepaid plans
You pay in advance, either as a lump sum or instalments, for a defined set of services at today's prices.
The key question is what is guaranteed. Funeral director services are typically fixed; third-party disbursements are frequently only contributed toward, with any shortfall payable at the time.
Read exactly which elements are guaranteed and which are estimated, because a plan covering only the director's services may leave a significant sum outstanding.
Regulation and security
The prepaid funeral market has been brought under formal financial regulation in several jurisdictions following concerns about how funds were held and sold.
Check that the provider is regulated where such regulation exists, and how funds are protected — typically through a trust or an insurance policy.
Check cancellation terms and what happens if you move, if the provider ceases trading, or if the nominated funeral director is no longer available.
Alternatives to a plan
Setting aside money in a dedicated savings account provides flexibility and keeps the funds accessible, though it does not fix prices against inflation.
Over-fifties life insurance policies pay a lump sum on death and are widely marketed for this purpose. Note that with these, total premiums paid can exceed the payout if you live long enough, and cover usually ceases if payments stop.
Some estates can meet costs directly, though funds may not be accessible immediately after death, which is precisely when the funeral must be paid for.
Recording your wishes
Wishes about burial or cremation, service style, music, readings and who should be involved are frequently unknown to families.
Write them down and tell the executor and family where the document is. Note that funeral wishes in a will are often read after the funeral has taken place, so the will is the wrong place to record them alone.
Discussing it directly is uncomfortable and considerably easier than the alternative, which is family guessing during the worst week of their lives.
This article is general information and not financial advice.
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