Last week I attended a course on pre-paid funeral plans with Safe Hands who are based in Wakefield. Safe Hands provides a range of plans currently starting at £1695.00 and they offer a variety of affordable payment options which include a one-off payment or payments which can be spread over a 10-year period.
There were over 60 people attending the meeting and this was the first of a number of such courses running through-out January and the attendees were a mixture of Equity Release Advisers, Estate and Will Planners, Funeral Directors and Mortgage Advisers.
There were a number of important points high-lighted at the meeting and these are common issues which we often identify when carrying out our initial discussion with clients who are interested in raising money through Equity Release.
One question is who pays for the funeral? I recently heard on the radio that up to 100,000 people borrowed money last year to pay for funeral costs, obtained either from friends or family or through other routes of finance such as personal loans or credit cards. Also, a point made at the meeting was that in 2016 almost 50,0000 pre-paid funeral plans were taken out so is it time for these plans to become part of our financial planning or are we happy to expect our family to find the money to pay the funeral costs?
Research provided by Sun Life indicates that the cost of funerals continues to rise. The average price in 2005 was £1,965, rising to £3,456 by 2013 and the cost is expected to rise to over £10,000 by 2029. So where is the money going come from in the future when we see that average debt is already increasing and average savings suggest that the majority of us are going to have a shortfall in our retirement income?
Some clients have made some provision to cover these costs. They may have taken out life assurance but as is common with these policies, most are for a fixed amount at a fixed monthly cost. These may have been adequate to cover the funeral costs when initially taken but are these policies regularly reviewed? In my experience they are not and when asked, clients don’t really have any idea how much will be paid out as they think they have taken adequate steps and therefore don’t need to look at these again. (There is also a similar issue regarding their wills!).
Safe Hands also provides a free funeral plan which enables clients to make their own decisions in advance regarding the sort of funeral they would like to have, rather than one which is arranged after their death by family who are doing their best at a difficult time but may-be do not really know what their relatives would have preferred. This is a really useful document which can be kept with the will so when death has occurred, the decision making has already been done. It’s certainly an option I shall be offering my clients in future.