Being prepared for long-term care and funeral costs
The process and arranging and covering the costs of long-term care can be complicated and slightly daunting. Additionally, funerals can be costly but there are several ways to prevent these costs from burdening your loved ones:
- You can save regularly into an account marked for funeral expenses.
- If you are in possession of a life insurance policy, check if your extra benefits will cover funeral costs.
- With a funeral plan, you pay an amount or installments to a provider, who then invests the money and uses it to cover the costs of your funeral. Ensure you check the terms and costs of funeral plans carefully – often they’re poorer in value as compared to a simple savings account.
Funeral plans and funeral insurance
These are two ways of paying for part of a funeral in advance, so that when you die your family will bear less financial responsibility. The aim of both these methods is to keep your money safe until it’s needed, ensuring there are funds to provide the funeral you’ve paid for.
The cost of a funeral will depend on the choices you make and the wishes you have. They can be elaborate – and more expensive – or minimalistic – at a fraction of the cost. However you choose to do it, many worry that they won’t leave enough funds to cover their funeral, which might negatively affect their loved ones.
With a funeral plan, you will pay for it and arrange the proceedings in advance, so your family doesn’t have to cover the costs themselves. Make sure to check what the plan includes and excludes as they don’t usually cover everything that is needed for a funeral. These terms will vary from service to service.
These plans often do not include the costs of a burial plot, a funeral director, flowers or catering.
Effectively an insurance scheme, once the money is paid into an insurance plan, you won’t be able to get it back. They require no medical terms, so whether you are in good or poor health makes no difference to your pay-out. However, note that if you miss one payment or are not up to date with payments, there will be no pay-out and you won’t get any amount back. Also note that the pay-out on some insurance plans do not increase with inflation, meaning you could end up paying higher premiums than you can claim.
Important questions to ask:
- Are there any cancellation fees?
- What is included in the scheme and what is excluded?
- What happens if there are any other expenses for the funeral?
- Is it possible to cancel the plan in the event of changing circumstances?
- Does the plan allow for you to choose your funeral director?
- What happens if this funeral director goes out of business?
- In the event that the person dies abroad or away from home, what will happen?
- What will happen if there are any outstanding instalments at the time of your death?
- If you pay through instalments, how long is this period and will there be interest charges too?
- Do you have freedom to change the details of your funeral plan at any stage?
- How does the funeral planning provider know about the holder’s death?
Alternative funeral arrangements
- Putting money into a monthly savings account – this, however, is not risk free as you might die before saving up enough for a funeral.
- Paying from your estate – including an amount in your will dedicated to the cost of your funeral.
- Death in service from an employer – some companies provide a pay-out if you pass on while still employed.
- Life insurance
- Trade unions, professional bodies or other associations may pay a benefit when a member dies, but this differs. Contact them directly to find out these benefits.
You can also cover the costs of your funeral in advance without taking out any funeral plans or insurance policies. It could be a simple arrangement to leave money in a separate account, and letting your lawyer and family know this money is set aside for your funeral.
Following this process, you should receive written confirmation of your cover. Keep this in a safe place and ensure your next of kin is aware of the arrangements made.