The Importance of Funeral Planning
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The Importance of Funeral Planning

 

 

 


When it comes to planning your finances, how many people think to include funeral planning? To many, funeral planning is something left to the very old, the ill or taken with them to the grave. Basically it just doesn't happen but why is this?

 


When you consider the soaring costs of funerals and the impact death can have on families both emotionally and financially, surely funeral planning is one of the kindest and most important things to include when it comes to putting plans in place.

 


The average cost of a funeral is currently more than £3,400; a cost that has risen by around 7% for the past 9 years, way above the rate of inflation. Taking into account the typical 1.5% interest rate on savings, there's little wonder families are facing financial hardship and having to resort to loans and credit cards as a way of paying for funeral costs.

 


When it comes to paying for a funeral, there are a number of options to choose from depending on your needs and budget.

 


Pay from your estate - This could be a straightforward option if you have sufficient funds although you do need to be aware that when you die, the bank or building society will freeze any account that isn't held in joint names. If presented with an itemised account from a funeral director, money may be released to pay for funeral costs but if not, your family will need to pay and recover the costs once the money is released.

 


Use your savings - This is possibly the most hassle free option as long as someone has access to your savings when the time comes. With such a large gap between the rate of funeral inflation compared to the interest rate on savings accounts, you may need to increase the amount you put by to account for any shortfall when the time comes.

 


A Prepaid Funeral Plan - You could arrange and pay for everything in advance with a prepaid funeral plan. Paying for funeral costs at today's prices means you will avoid the impact of future inflation and arranging everything yourself will remove what some would consider the painful decision making process from your family when the time comes. Cover does vary slightly depending on the provider so it makes sense to compare funeral plans before making a decision.

 


Over 50s Life Insurance - These whole of life insurance plans guarantee to pay an agreed amount of money when you die. The money is paid in a cash lump sum so your family can choose to spend it how they want although the majority of these life insurance plans are sold to help pay towards funeral costs.

 


You can choose between a Guaranteed Over 50s Life Insurance Plan and an Underwritten Plan. The Guaranteed option offers guaranteed acceptance with no need for a medical, so the state of your health is not taken into account and you are fully covered after an initial period of either one or two years. Underwritten Life Insurance has a lengthier application process that includes health and lifestyle questions but may offer you at least 40% more cover for your money.

 


So if you're looking to compare Over 50s life insurance and you don't mind a lengthier application process, it may be worth comparing both options.

 


Another important part of funeral planning is writing a Will as this is the only way you can be sure your belongings and possessions go to the right people. Without a Will in place, the state decides on how your estate is divided according to the laws of intestacy. These laws are quite antiquated and certainly don't take into account the more complex lives we lead these days so don't get caught out.

 


Ashley Shepherd is the Founder and Managing Director of Over50choices, a personal finance comparison website and funeral planning experts for the Over 50s.


 

 

 

 

 


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