Funeral Plans

Funeral plan

A pre-paid funeral plan is a stand-alone option for paying for your send-off.

You can either pay in advance in one payment or spread the payments for the plan over a number of months. What’s included varies – some policies simply cover the funeral director's costs, while others pay for the entire thing, including a plot and the wake.

Cover tends to come in tiers from basic to more premium options. Read all the small print carefully, so you know exactly what's included.

Funeral insurance (over 50s plans)

You’ll sometimes hear these called over 50s plans. You make regular payments to the insurer and they’ll pay out a lump sum when you die.

You don't have to set it up so that your beneficiary uses the payout to cover funeral costs, but many people do and it's often what the payout's used for.

Be wary, you’ll make payments right up until you die, or up to a specified age, so you could pay more than you get back.

If you want to cancel your insurance, you won’t get your money back. Missed payments often terminate policies, and you could lose the money you’ve put in. Make sure you're had a good look at the terms and conditions before you take out a plan.

Life insurance written in trust

If you’ve got life insurance, you can put it into a trust. You might get the option to do it when you buy a policy too. Life insurance in trust allows the pay-out to go straight to your beneficiaries, so it won’t be subject to inheritance tax. Because it’s managed by a trustee, you also bypass the probate process – where your executor is given the right to deal with your estate.

It can also give you more control over how the funds are used, making it easier to be sure some money will be set aside to cover funeral costs.

Setting up a trust isn’t always straightforward – you’ll need to appoint trustees and choose the type of trust you want. If you use solicitors, there’ll be a fee to pay.

Savings

You can use your savings to pay for your funeral. However, unless it's a joint account (where the surviving joint owner can immediately access the whole account), any money held in your accounts will be frozen when you die. That’s because they’re part of your estate and might be subject to inheritance tax.

Most banks will release money to pay for a funeral to the executor or administrator if they're shown an itemised bill and a copy of the death certificate.

Talk to your appointed solicitor or advisor about any costs you need to charge to the estate.