Disadvantages to Pre-paid Funeral Planning

Upfront payment 

The main negative of pre-paid funeral plans is that you must pay upfront and you may need these funds for other things.

For example, if you can’t fully cover the cost now and dip into savings, you may find you don’t have funds to cover the cost of residential care. 

Also Read: What is a pre-paid funeral plan?

Not all costs are covered 

Pre-paid funeral plans won’t always cover the full cost of your funeral.  Most plans don’t include funds for every aspect. 

For example, the procession and church service may be covered, but the cost of the burial plots or cremation are left out. 

Extra details like flowers may also be classed as additional items. 

It’s important to carefully consider whether the plan will provide the funeral you want and whether it’s a cost-effective option for you.

If you die shortly after taking out the plan 

Pre-paid funeral plans are not suitable for anyone who could die imminently.

Pre-paid funeral plans are long-term investments designed to mature over time or be paid in instalments over the course of one or more years. 

Most plans state that if you die within one or two years of having taken out your policy, they will not be able to honour the plan. 

In this instance your money is refunded to your estate, but it is unlikely to cover the cost of your funeral. 

Even if you don’t fall within this limit, if you die before you have paid for the plan, your relatives will need to pay the remaining balance before your funeral can be arranged, or cancel the plan and obtain a refund.

It may not suit your personal financial situation 

You should also consider your personal financial situation when taking out a pre-paid funeral plan. 

If you think you may run out of funds to pay for your monthly fee, either because you are paying for care, or have used up your savings then the plan will be cancelled. 

Most companies have a cancelation policy and fee attached. 

For this reason, it’s key to consider the future carefully before taking out a plan. 

If you change your main within 30 days most providers will enable you to cancel without charge. 

Also Read: Advantages to Pre-paid Funeral Planning