Funeral plans and the ‘peace of mind’ delusion

Charles 12 Comments

It may be that the media are beginning to wake up to the inadequacies of pay-now-die-later funeral plans. The Times has a piece today which, chances are, you won’t be able to read online because you haven’t got a key to the paywall. So I’ll summarise. 

It highlights third-party costs that funeral plans generally do not cover — costs which cluster under the umbrella known formerly as ‘disbursements’ until the Dismal Trade cottoned on to the fact that no one outside the Trade uses the word ‘disbursements’; it may sound like a good and impressive word but is effectively Double Dutch. Undertakers: please stop using it. From now on, talk only of third-party costs. 

Funeral plan providers actually make it pretty clear what costs are covered and what costs aren’t, so there’s little excuse for surprises when the undertaker’s account flops through the letterbox — or, rather, there is no excuse for the person who has died not to have made provision for these costs in another way – by popping a grand into an Isa, for example. Buyers seem to be blinded by the peace-of-mind message common to all providers. We are disappointed to note that the Funeral Planning Services Liberty plan claims on its home page: 

With a Liberty funeral plan you can both choose your own funeral arrangements for your own peace of mind, and freeze Funeral Directors’ costs at today’s prices, saving your family from having to make difficult emotional and financial decisions in the future, and only on the Details page comes clean and makes you aware of: Option to contribute towards third party costs such as crematorium, doctors & clergy fees

Less justifiable is the sales trick used to stampede people into buying a plan. Yes, the cost of dying is rising by around 7 per cent per year. But most of this increase is not in undertakers’ costs, it is in the fees payable to third parties (once known as disbursements). 

The Times article has a swipe at Age UK, the ‘charity’ which, as we have had cause to deplore often, here, *flogs Dignity plans to trusting elderly folk. The Times correctly observes that these Age UK plans “tie families in to using an approved funeral director rather than a local, often cheaper, independent undertaker.” The ‘approved’ funeral director may well be based some distance from the person who has died. 

The Times piece correctly notes that funeral plans are not regulated by the Financial Conduct Authority. 

The article concludes with a case study that’ll make your lip curl: 

Ros Rhodes, 70, was shocked to receive a bill for more than £1,000 for her mother’s funeral, as she believed all costs would be covered by an Age UK funeral plan. Her 89-year-old mother had spent almost £3,000 on the plan 18 months previously.

The extra costs were even more perplexing because the undertaker’s account showed that he had been paid only £2,169 from Age UK — £571 less than her mother had paid the charity.

She says: “I have telephoned and written to Age UK to try and find why there was such a difference in the money paid in and the money paid out. I have been fobbed off with trust funds, expenses, inflation and other such terms that are of no real answer.”

After Age UK was contacted by Times Money it sent Mrs Rhodes a cheque for £750 as a goodwill gesture. The charity said that there had been a mix up with the bill and Mrs Rhodes should not have been charged so much, and also that she should not have seen the breakdown of the funeral director’s expenses. But Ros says had she not seen the breakdown, she would have never have queried the bill.

*The Age UK Guaranteed Funeral Plan is offered by Advance Planning Limited, a company incorporated in England and owned by Dignity Pre Arrangement Limited (a subsidiary of Dignity plc). Registered office: Advance Planning Limited, 4 King Edwards Court, King Edwards Square, Sutton Coldfield, West Midlands B73 6AP. Registered in England, no. 3292336. — Source


  1. Charles

    Good point Poppy – I advised a friend’s aged parents to put their funeral money in a separate account and just inform their son of their wishes – or a friend, or their solicitor if they prefer.

  2. Charles

    funeral plans are terrible unless you’re in a care home and have a lot of cash in the bank. I rarely advise people to take them out. problem is, in the long run as a business we’ll end up losing out…

  3. Charles

    Smoke and mirrors?

    I will take your advice about ‘disbursements’ and change the description to ‘third party costs’ as soon as possible.

    Like many funeral directors, I am not nor ever have been, a fan of pre-paid funeral plans.

  4. Charles

    Does it really matter what they’re called? All most consumers care about is the bottom line – ie how much it costs. The only way to really make pre-need funerals fair on the client is to guarantee the cost at the time of need. That means putting the client before ourselves (as funeral directors) – something which only a handful of us are willing to do.

    Whether we like them or not, the corporates will be selling them by whatever means they can for a long time yet. If we independents don’t do the same, our market share will decrease much more rapidly than we are complacent enough to believe.

    So to all those who think they are a bad idea – watch out, if you care about your business!

  5. Charles

    Andrew’s comment may be true; but it assumes that there’s nothing the rest of us can do to get the word about that funeral plans are A Bad Thing. It may not be easy; but the odd investigative finance journalist might get interested? Martin’s Money Tips? Radio 4 money programme? or even just a home-made leaflet called A Better Alternative to Funeral PLans?

  6. Charles

    The main problem with re-paid funeral plans is that it is not regulated by the FSA , and because of this anyone can just set up a funeral parlour or funeral plan trust, I mean anyone! it costs very little to set up a trust (I have done this myself for something else), find yourself a couple of like minded trustees, pinch someone’s website and advertising material (amend accordingly).
    Then you scoop your percentage (this amount is up to you there are no rules), funeral plan cost £3000 upwards, the funeral director gets between 1 and 2k so the rest is ‘Admin’.
    The big providers to be fair are so well funded as they are huge companies with enormous assets (running into hundreds of millions), and they have thier own funeral directors(therefore they can do the funeral at whatever price they want), so they are probably the safest bet. However if you can afford to buy a plan for £3000, then surely you are smart enough to find an investment that will grow at the right percentage rate to fund your funeral?
    However there are several ‘newish’ companies who have very small funds and no funeral directors to pass the work onto, in addition there are many funeral directors who ‘will not’ perform a funeral at the price the funeral plans pay out at the time.
    Therefore what do you do if your funeral plan is inadequate and you cannot find the additional funds to bury your loved one?
    Do you have any recourse against the funeral planning company? the answer is probably no as its not a regulated industry.
    So at the time when you need the support and financial input do you really think the owners of these funds will care, your dead so of course they won’t. But they will be happy to take your cash and dissappear into the sunset (spain maybe).
    Losing a loved one is the most distressing thing that will ever happen to you, everyone rich, poor, back, white has to face death sometime in their lives, surely everyone deserves some sort of dignity in death, my guess is you won’t get this comfort from a funeral plan. Put your money in an ISA of you can afford it.
    If you are really poor leave it to the state they cant just leave you they have to dispose of your body its the law.
    In addition there are many ‘cut price’ funeral directors who will perform a funeral under £1000.
    Surely the only people who should run these funds are the government, its madness to allow just anyone to set up a funeral company, they have become sales companies who employ hard nosed Car Salesman to rob hard working people of their piece of mind.

    1. Charles

      Thanks Roger, I do not have a problem with these types of plans pursae I could have done with one very recentley. I just feel it is too sensitive an area that these companies should be regulated. I am sure the big players in this industry would welcome it and stop this flood of in my opinion inexperienced and possibly even crooked companies cashing in on our older generation. Afterall we are all heading that way thats the only certainty in this life. I just hope sites like this can draw enough attention to this situation before it getsout of hand and we are into another government bail out situation afterall people have to be buried/cremated its the law so its our taxes that are going to be wasted on this.

      I haven’t finished with this subject yet there is much to do.

  7. Charles

    As one who has seen the impact of Regulation by the FSA and it’s successor, I can promise you the following results:

    1) More expensive funeral plans.
    2) Less independent advice.
    3) Less inovation.
    4) An industry controlled by well intentioned folk motivated soley by creating bad PR (they think destroying confidence makes them look successful!) who have no understanding of the value they are destroying.

    Since 1988, the need for financial advice has risen dramatically in a more complex world, and the population involved has grown substantially.
    The number of people available to give financial advice has been cut from over 400,000 to less than 30,000.

    That is the “sucess2 achieved by the FCA – less advice, and less confidence in the products and services provided, pensions decimated, mortgage endowments destroyed and did I mention that the FSA being alseep (or just plain stupid) was the reason for the import of damaging financial products which caused the recession?

    If you want the funeral industry to be destroyed, call for the FCA to Regulate it! I promise you, the only beneficiaries will be the bureaucrats in their ludicrously expensive offices in Canary Wharf.

    1. Charles

      I forgot to mention the following FCA quirks:

      1) They change the rules retrospecitively,so no one is ever secure.
      2) They take 20 years or more to discover catastrophes which are obvious to most in the industry – for example, PPI – I was aware of the problem before 1988, but Regulators are apparentlyborn deaf.
      3) They expect an individual in the industry to know MORE than their entire highly paid staff.
      4) They are REALLY expensive, and who pays? CONSUMERS.

      Hit the auto destruct button if you want, but count me out!

      I would have no problem with a regulator which was open,honest, honourable, responsive, intelligent and cost effective. But that most certainly is NOT the FCA!

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