Funerals are often expensive and it's usually your loved ones who cover the costs. Because of this, you may be considering a pre-paid funeral plan. Before you purchase a plan, here's what you need to know.
Cooling-Off Periods
Pre-paid plans have a cooling-off period and that period is regulated by law. You're entitled to a refund within a certain time if you change your mind. The provider must take action within a reasonable amount of time. However, they can charge you a small cancellation fee. To understand more about the cancellation fee, check your contract before signing.
Contracts Have Specific Requirements
The organisation offering your pre-paid plan must outline specific factors in your contract. The services you're paying for are clearly set out in the contract, so make sure it covers everything you need. It helps to have an idea of what you want in advance, then check with the provider. Your contract should also clearly state that there are no additional costs to be covered when the plan is used.
The Money Has Specific Uses
Once you pay into a funeral plan, that money is available for funerals only. Your loved ones can't decide to use it for something else after you pass. You also can't withdraw from the fund while you're alive, so it's worth recognising that it's a financial commitment you need to stick to. However, the fund is also well-protected by independent management. It also benefits from interest, so your fund should grow in line with the cost of inflation. As such, the fund is ideal for alleviating any worries you're loved ones may have about paying for a funeral.
Payments Work in a Couple of Ways
You can either pay all of your funeral plan at once, or you can make monthly installments. Both options have their advantages. Paying in monthly installments means you have an easier time covering the costs when a lump sum isn't available. By choosing a lump sum, you know your plan is in place and ready to use when your loved ones need it. You'll have peace of mind knowing that all your intended costs will be covered. It's also worth knowing that your plan is exempt from inheritance tax. As a result, it costs less for your loved ones than using a standard savings account.
If you have specific funeral requirements, you can detail them in your plan. Make sure you inform the organisation overseeing your plan about your wishes.
For more info about pre-paid funerals, contact a local funeral home.
