Prepaid funeral plans vs over 50s plans – How could your client cover funeral costs?

Currently there’re 100 funeral plan options available on the market which cater for a variety of different needs and budgets.

Your client has the freedom to choose a plan which suits them. Some of the main providers include Dignity, Golden Leaves, Co-op and Golden Charter.

Funeral plans cost between £2,000 – £4,500 depending on the level of service included. The cost of a plan can be paid in full, or your client can choose to pay by monthly instalments over a payment term.

What is an over 50s plan?

Compared to a funeral plan, over 50s plans (or ‘over 50s life insurance’) are a widely known product in the UK and probably better understood by clients and their advisers.

It’s a type of insurance policy designed for people who are aged 50 – 80 (or sometimes 50 – 85), who want an affordable way to leave some money behind to loved ones.

Many people within this age bracket are drawn to over 50s plans because the application doesn’t require any medical information and acceptance is guaranteed regardless of a client’s health status. This also makes the application process quick and painless.

Another key feature of an over 50s plan is that it guarantees to pay out when the client passes away, which is why it’s sometimes described as whole of life insurance or life assurance.

As a result, the client must pay a monthly premium for the rest of their life, or until they reach a certain age such as 90.

Premiums range from around £4 a month to £75 a month, with various factors determining the exact cost. The most dominant over 50s plan providers include SunLife, One Family and Royal London.

What are the pros and cons of a funeral plan?

The main pros and cons which you may highlight to a client are as follows:

Advantages

• Protects loved ones from having to arrange and pay for their funeral when the time comes
• Price is fixed regardless of the client’s age
• Automatically exempt from inheritance tax (IHT) and probate
• May provide protection against inflation
• Can be cancelled at any point, and money is refunded (minus a cancellation fee)

Disadvantages

• Can be expensive compared to an over 50s plan
• Won’t cover the total cost of a funeral, as some costs are not within the control of the funeral plan provider
• If funeral prices decrease, then your client could lose out
• Instalment fees apply if paying by monthly instalments over 12 months
• Not all plans are regulated. From July 2022, the funeral plan market will be regulated by the FCA.