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Two Together: Save £100!
Save £100 when you purchase two funeral plans together. Call us for more details.
Two Together: Save £100!
Save £100 when you purchase two funeral plans together. Call us for more details.
8 minute read
Perhaps the most frequently asked question we are asked from people seeking a funeral plan is, “Are prepaid funeral plans safe?”. Above all, the most important factor in considering a funeral plan is whether or not that provider can be trusted. If you can’t trust that your money will be safe with the provider you choose, then how can you enjoy the peace of mind and the other financial benefits that come with them?
It would be remiss of us not to acknowledge the negative publicity that funeral plan providers have received in recent years. We understand that many of the families we have spoken to have had concerns about this and wanted extra reassurance that we will deliver on the promises that we make. But please don’t worry; we aim to answer the question of how we keep funeral plans safe in the following article and set your mind at ease.
Until very recently, the funeral plan industry was not regulated by the Financial Conduct Authority (FCA). But, as of 29 July 2022, shortly after the high-profile collapse of a large, UK funeral plan provider, the FCA started to regulate our industry. This required every organisation selling funeral plans to be regulated and authorised by them. There are a number of important benefits for you as a result of this regulation.
Funeral plan providers are now required by law to protect the money you give to them for a plan. One way they can do this is by keeping it in an independently-managed trust. With Aura Funeral Plans, this means the money held within the trust is looked after by a board of trustees who are independent from Aura.
There is now an industry-wide ban on cold calling, meaning that funeral plan providers cannot make unsolicited calls to people for the purpose of selling a funeral plan. It means that the only way you’ll be speaking to a funeral plan provider is if you’d like to start the conversation yourself.
Intermediaries in the industry, such as funeral directors, are banned from earning commissions on funeral plan sales. Furthermore, sales staff at funeral plan providers are required to ensure that they are not mis-selling products to customers. The customer must be provided with clear and sufficient information that enables them to make a decision on which is right for their needs. This means that you can trust you will be getting a plan that actually suits your needs, and which is right for you, rather than with any unnecessary and pricey extras.
Companies selling funeral plans are now legally obliged to deliver the funeral you pay for in your plan. If the customer dies within two years of starting plan payments (before having fully paid for the plan), a full refund can be sought. If something happens to the company you’ve bought a plan from which means that they can’t deliver a funeral themselves, they must either refund you or transfer your plan to another provider.
Many find that buying a funeral plan allows them to combat rising costs. They also provide peace of mind all around: You can get the most out of life knowing that a big item has been ticked off your to-do list. And those closest to you will have peace of mind when the time comes knowing that your funeral is already paid for and that it will proceed exactly as you would have wanted. But how do funeral plans work?
The answer to this will depend on your provider. The money that’s set aside for your plan should cover most things. If, like Aura, your provider is all-inclusive, it will also cover the collection of your body from anywhere within Britain and the hand-delivery of your ashes to a loved one. Other providers may charge extra for these services, so make sure you understand what your plan pays for. In short, if you’ve purchased and paid for a plan when you die, your plan will be activated, and this money will then be used to pay for your funeral.
Legal & General estimates an 84% increase in funeral costs in the UK over a 20-year period. If funeral costs continue to rise at the same rate they have been, the average cost by 2033 could be £6,259. A big reason why many buy a funeral plan is to lock in today’s prices. You could buy one of our funeral plans today, starting at £1,595, and that’s all you’d ever pay, even if your plan is not activated for many years and the starting cost by then is much higher.
In the end, whether or not you buy a funeral plan is your choice, and will depend on your circumstances. For instance, if you already have a life insurance policy in place, it may not be as important to set up a funeral plan. While we can’t speak for other providers, we at Aura are more than happy for you to change your mind for any reason at any time. So if you decide to make any changes or would like to cancel, there are no fees for doing so.
Aside from the benefits of the FCA regulation mentioned above, there are other advantages available to you, such as access to the Financial Services Compensation Scheme (FSCS) and the Financial Ombudsman Service (FOS). Respectively, the FSCS and FOS allow you to seek compensation in the unlikely event that your provider were to go out of business.
The Financial Services Register is the log kept by the FCA of companies regulated and authorised to sell financial products and services in the UK. Funeral plan providers were required to apply for registration with the FCA some time ago. If they missed the deadline, they had until 31 October 2022 to transfer the plans under their management to an authorised provider. If you would like, you can see the FCA’s website to check that your chosen provider is registered.
Thanks to FCA regulation, if we are unable to deliver on your funeral then we are legally required to fully refund the money you’ve paid, or transfer your plan to a different provider who can deliver on it.
In the unlikely event that Aura were to go out of business, the fact that your money is placed into an independently-managed trust means that you are fully protected. You can either seek a full refund if this happens or have your plan transferred to a new provider.
Over-50s life insurance and a funeral plan are two different kinds of financial products, so this really depends on what your needs are. A life insurance payout when you die can go towards funeral costs, but it’s not necessarily designed for this purpose. Depending on the policy, it usually provides a lump-sum payout to your chosen beneficiary after you’ve died, but it may not be enough to cover the full cost of your funeral. Or, you may have other intentions in mind for it, like leaving it as a gift to friends or family. A funeral plan is purpose-built for paying the cost of your funeral, and it can’t be used for any other reason. There’s nothing stopping you from having both, of course. Insurance providers in the UK, like funeral plan providers, need to be registered with the FCA.
We hope that reading this article has reassured you and answered any questions you may have had about the security of your plan.
At Aura, we pride ourselves on high ethical standards: We are not merely the only direct cremation plan provider with two plan options rated at five stars by independent experts, Fairer Finance. We have also been shortlisted for the SME Compliance Team of the Year award at the ICA Compliance Awards 2024. We have worked hard to develop a reputation for trustworthiness, which is one of the reasons we are the highest-rated ‘Cremation Services’ provider, rated at 4.9 stars by customers on Trustpilot.
If you are interested in learning more about the particular benefits of Aura’s own funeral plans and how we keep your funeral plans safe, read more here. Alternatively, you can get in touch by calling or writing to us; we’d be delighted to hear from you.
