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Pre-paid funeral plans – provider protection

21st September 2017

Talking about one’s final wishes is a somewhat sombre subject, but an important one nonetheless, as having the knowledge of our loved one’s preferences together with access to their financial arrangements can help those left behind.

Putting money aside to pay for one’s final send off represents sound financial planning, especially as funeral costs are reported to be on the rise, but what options are available?

Savings

Those with sufficient savings or investments often make this their first port of call. With rising rates of inflation, low interest rates and rising funeral costs, this method has its challenges in keeping pace and relatives need to be able to access your savings easily on your death.

Life cover

Some people may prefer to make regular payments into a life insurance arrangement, which will provide a lump sum payment in the event of death. These policies are medically underwritten so those with certain health conditions may find the premium increases or exclusions apply, but they can be written under a trust arrangement which has the benefit of avoiding probate.

Funeral plans

More people are now familiar with pre-paid funeral plans thanks to television promotions. These tend not to be medically underwritten and allow you to pay upfront or via a monthly payment, but many people may not be aware that these arrangements usually aren’t covered in the event that the provider becomes insolvent.

Compensation rules

The Financial Services Compensation Scheme (FSCS) does not provide protection for those with funeral plans as they are not categorised as ‘designated investment’ under FSCS’s compensation rules.

As a reminder, FSCS protects consumers who have incurred financial loss when authorised firms are unable, or likely to be unable, to pay claims against them relating to:

  • deposits
  • life and general insurance policies
  • investment business (on or after 28 August 1988)
  • advice and arranging of mortgage business (on or after 31 October 2004)
  • insurance intermediation (general insurance and pure protection contracts, for business conducted on or after 14 January 2005)

Many people may think that funeral plans are subject to the same regulation and consumer protection as other products, so it’s important to be aware of this important difference and anyone with a funeral plan who is concerned should contact their provider in the first instance. The regulatory body for the funeral planning industry is the Funeral Planning Authority – details are listed below.

Funeral Planning Authority
Barham Court
Teston
Maidstone
Kent ME18 5BZ

Telephone: 0845 6019619 (call charges may apply)
Email: info@funeralplanningauthority.co.uk

Website: www.funeralplanningauthority.co.uk

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Armstrong Watson LLP is a limited liability partnership registered in England and Wales, number OC415608. The registered office is 15 Victoria Place, Carlisle, CA1 1EW where a list of members is kept. Armstrong Watson Accountants, Business & Financial Advisers is a trading style of Armstrong Watson LLP. Armstrong Watson LLP is regulated by the Institute of Chartered Accountants in England and Wales for a range of investment business activities.

Armstrong Watson Audit Limited is registered to carry on audit work in the UK and Ireland by the Institute of Chartered Accountants in England and Wales. Registered as a limited company in England and Wales No. 8800970. Registered office: 15 Victoria Place, Carlisle, CA1 1EW

Armstrong Watson Financial Planning Limited is authorised and regulated by the Financial Conduct Authority. Firm reference number 542122. Registered as a limited company in England and Wales No. 7208672. Armstrong Watson Financial Planning & Wealth Management is a trading name of Armstrong Watson Financial Planning Limited. Registered Office: 15 Victoria Place, Carlisle, CA1 1EW

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