Funeral plans still in demand, but are they safe?

Around one in six burials and cremations were funded by prepaid funeral plans last year, according to a trade body. 

The first annual report of the National Association of Funeral Plan Providers found there was ‘continued demand’ for funeral plans, and there was now ‘more choice than ever’. 

Funeral plans allow you to pay upfront for your funeral, so your relatives don't have to cover the costs themselves. 

But they don’t cover the cost of everything, and thousands of victims were left out of pocket when several providers went bust before regulation came into force in July 2022. 

Here, Which? explains if a funeral plan is right for you, whether they’re safe and how else you can plan ahead.

One in six plans fund funerals

According to the National Association of Funeral Plan Providers (NAFPP), there were 112,019 funerals funded by plans in 2023, and 169,846 new plans opened.

NAFPP said this equated to around one in six funerals, although it doesn’t have the final figure for the total number of funerals in the UK held last year. 

The trade body said the figures highlighted the ‘continued demand’ from consumers to set out their funeral preferences in advance, and to make financial provision for them. 

NAFPP president Steve Rowland praised providers for adapting to the new regulation. He said: ‘New propositions for families have emerged and with new providers entering the market, there is probably more choice now than ever.’

This is the first annual report of prepaid funeral plan sector volumes by the NAFPP, and reprises a biannual market update formerly provided by the now defunct Funeral Planning Authority (FPA). 

• Find out more: funeral plans explained

Should you take out a funeral plan?

When you take out the funeral plan, you decide on what you'd like your funeral to include.

After you pass away, your family gets in contact with the funeral plan provider and works with the funeral director to organise the funeral.

Prepaid funeral plans allow you to lock in today’s price, so they’re protected from inflation. 

It also means your loved ones won’t have to pay for a funeral down the line. They allow you to plan what type of funeral you want, which can save your loved ones the time and emotional toll of organising it.

However, it won’t cover all costs so your family might need to pay for extras including burial plots, flowers, the wake and catering. 

• Find out more: funeral costs revealed 

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Are funeral plans safe?

In July 2022, funeral plans became regulated by the Financial Conduct Authority following concerns over high-pressure sales tactics.

The transition to regulation led to several providers failing to get authorisation from the FCA, and some went into liquidation – including Safe Hands, Unique and One Life. 

The FCA now regulates funeral providers, which means only those authorised are allowed to operate. You can search the Financial Services register to see which providers are authorised. You can also check the FCA list to see which providers were refused authorisation. 

The FCA regulation included a ban on cold calling, commission payments to intermediaries such as funeral directors and full fitness-to-operate checks on providers selling plans. 

Now the industry is regulated by the FCA, it also means you’ll be covered by the Financial Services Compensation Scheme (FSCS) if your provider goes bust – up to £85,000 – and you can escalate a complaint about a funeral plan provider to the Financial Ombudsman Service.

• Find out more: Financial Services Compensation Scheme explained

How to choose the best plan 

A comparison site is a good way of taking the legwork out of finding a number of suitable plans.

Over50Choices, for example, compares many of the big providers.

Remember, however, that funeral plans can be complex, so you should examine the policy carefully and phone the provider if you are unsure about any of the details.

• Find out more: funeral plans explained

Alternatives to funeral plans 

A prepaid plan isn’t the only way you can plan ahead for your funeral.

Over-50s life insurance

Life insurance is a financial product that enables you to leave behind money for your family when you die. 

A lump sum is paid out when the policy holder passes away. This can be used to replace lost income, pay off debts and cover funeral costs.

Over-50s life insurance, which pays out a fixed lump sum when you die, is often marketed as another way to help your family cover funeral costs. 

Unlike regular life insurance, there’s no medical screening – all that’s checked is your age and smoking status. You choose your monthly premium, which can start from around £5. 

However, there’s a good chance you’ll pay more in premiums than the policy pays out.

• Find out more: best life insurance

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Savings and investments

You can leave money in your bank or savings account to cover your funeral, but your family may have trouble accessing this when you die. 

This is because banks and building societies normally freeze accounts when they're informed of the account holder’s death. 

Your family will need the help of the executor or administrator of the estate to access the money.

• Find out more: reasons to make a will

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