The cost of funeral arrangements is steadily rising, with families having to cut into savings when experiencing the unexpected loss of a loved one. Financial Advisor, Taimoor Mirza, looks at the benefits of Funeral Saving Plans.

Q) My neighbour died and her funeral was so expensive, it placed a burden on her family. I want to make sure I don’t leave such a burden. Are there any funeral savings plans?

A) Death alongside taxes (in the UK) are guaranteed for us all, however it is rather shocking to discover the lack of people signed up to a Funeral Savings Plan in the UK. This is in stark contrast to mainland Europe, where in countries such as France and Germany, almost half of the population is signed up to plans such as these and in neighbouring countries like Belgium and the Netherlands, almost three quarters of the population have decided on a funeral saving plan.

Indeed, it is easy in the midst of life to forget that eventually, this life will come to an end. Of course, planning ahead and indeed saving for your own funeral may seem rather depressing and perhaps tempting fate, but it can save your friends and family money and stress at an emotional time, when it may be difficult for them to make such necessary arrangements.

The average cost of a funeral in the UK is £2,000. Muslim funerals tend to be slightly cheaper than that but it all depends on what the person and the family opt for in terms of the funeral (casket, gravestones etc). If, for example, the deceased wished to be buried abroad, then of course you need to pay for the flight, transport from the coroners to the airport and associated travel costs abroad, which inevitably all adds up to quite a large sum of money.

Taking out a funeral plan is one method of ensuring your funeral is paid for when you die, the other is life insurance. A decent prepaid plan will cover the cost of arranging the funeral, burial and ‘disbursements’, which is the documentation arising from the doctor and the clergy, which you also have to pay for.

One of the main advantages of prepaid plans is that you pay for your funeral at today’s prices, therefore eliminating inflation and saving your loved ones from having to pay the majority of the costs, if not all the costs.

As with all insurance companies, there are thousands available in the market which provide funeral savings plan. The plans are very much affordable starting from just five pounds a month, for the most basic ones (the majority of these don’t cover the actual burial, however) and prices vary according to your own specific needs and where you are based in the UK. Once you have chosen the plan, you can opt to pay either in one full lump sum or in instalments. Should you choose to make one, complete payment or even several over a period of 12 months, usually there is no interest attached.

The majority of plans are specifically designed for the over 50’s, as research shows that more people above this age tend to purchase the plan than those who are over 25.

The biggest funeral director and plan provider in the UK is The Co-operative Group who, like many others, have a custom plan which caters for Muslim needs and a lot of the mainstream companies which they work with include a range of funeral directors. As mentioned earlier, the alternative to a funeral savings plan is life insurance. This is not as quick to pay out as the respective insurer has to wait for all the paperwork to arrive (coroner’s and doctor’s report) and if you factor in time for administration, it can take a while. This can cause problems specifically as a result of the need to bury the deceased within three days.

Problems can also arise with the terms of the plan. If, for example, you are over the age of 50, life insurance will prove rather expensive, and will last up to a maximum age of 70. Should you outlive the age specified on your life insurance policy, then there is no pay out. Whereas with funeral plans, payment is guaranteed upon death, at whatever age that may be.

Having a funeral plan already in place also makes the ordeal somewhat easier on family and friends.