FAQs for planholders/those interested in finding out about funeral plans
A funeral plan is an arrangement that allows a customer to pay in advance for theirs or another persons’ funeral.
The plan is a contractual arrangement with a provider, who assuming the plan has been paid for, is then responsible for arranging the funeral when it is required and paying for those elements covered by the plan.
Pre-paid funeral plans allow you to choose and agree the arrangements for the sort of funeral you wish to have in advance. They also allow you to fix the cost of most elements of the funeral, and protect you from future inflation of funeral related costs.
Some life assurance policies which provide a cash amount on death are sometimes called funeral plans. However, they are not, for a number of reasons.
Firstly, the money paid out can be spent on other things. Secondly, the money paid out may not be enough to cover the expense of a funeral. Finally, there isn’t a contractual arrangement with a provider who is responsible for arranging the funeral.
A funeral plan provider is an organisation that allows customers to pay for their funeral in advance through provision of a funeral plan. These providers may be funeral directors, a subsidiary company of a funeral director, or a separate firm who make arrangements with funeral directors to carry out funerals on their behalf.
The FPA is there to add objective scrutiny to providers who chose to register with us. This scrutiny is intended to add a degree of basic consumer protection by ensuring that providers conform to the FPA Rules and a Code of Practice. This scrutiny is carried out by the FPA’s Independent Compliance Committee.
For the provider, being registered demonstrates they are operating above the basic required standards – which in turn provides an additional level of reassurance to customers purchasing a plan from them.
The FPA offers a facility to check whether our registered providers have a funeral plan in place for an individual. Further details can be found here.
Click here to view the list of all registered providers. Use the search facility if you have a provider in mind and you’d like to check their registration status.
Once you have chosen a provider, it can be helpful to visit their website, as many will include information which will help you do some initial research before you contact them directly.
There are a small number of providers who are not registered with the FPA. This may be because they have chosen not to be registered or because they have as yet not passed the registration process.
Companies offering funeral plans are not legally required to be registered with the FPA, but all funeral plan providers have to comply with some basic rules. Being registered with the FPA means they have undergone additional scrutiny and must comply to a more stringent set of rules and requirements.
If you are considering buying a plan from a non FPA registered provider, it is recommended that you carry out your own checking process. The sort of questions we would suggest asking the non-registered provider are:
• Who are the trustees / or the insurance company and what is their relationship with the provider?
• What is the current solvency position of the trust fund?
• Who has assessed that position ? (basically there should be an actuary valuing the trust)
• What are the assets of the fund and who is managing these assets?
• What are the arrangements for carrying out funerals and how are these reflected in the valuation of the trust’s liabilities? (if no arrangements are in place then assessing what the liability might be in a number of years’ time has significant challenges)
In addition, it may also be worth checking for information about the firm registered at Companies House.
It is worth emphasising that FPA Registered providers choose to have their finances and procedures independently scrutinised by the Authority on annual basis, and further agree to operate within the terms of the Authority’s Code of Practice. Providers not registered with the Authority have elected for whatever reason not to submit their operations to such scrutiny.
Third parties selling on behalf of registered providers should conform with FPA Rules and our Code of Practice where applicable, and registered providers working with them have responsibility to ensure that this is the case. The FPA check that providers have processes in place to carry out checks on providers they are working with and to monitor their behaviour.
If any customer has a complaint about a third party operating on behalf of a registered provider, they should complain to the provider and / or use our complaints form.
Firstly we would suggest you look for a plan from a provider who is registered with the FPA. This gives you an additional level of reassurance that the provider is compliant with a stringent set of rules and standards, which go above and beyond the basic requirements.
It is then important to think about what you want the plan to provide in terms of services. It is particularly important that you understand what allowance the plan makes to cover third party costs (such as crematorium costs).
A further factor to be considered for some people might be what happens if you move to another part of the country.
We also suggest confirming what the cancellation arrangements are, in the unlikely event that you wish to terminate the contract with your chosen provider.
It can feel like a sensitive subject to discuss your funeral with family and friends. However if you do buy a funeral plan, we recommend you explain exactly what you have purchased with those close to you, and ensure they are clear on who the plan is with, and what exactly it covers. This will help them to be better informed when they’re liaising with your plan provider to confirm your funeral arrangements at some point in the future.
There are some price comparison sites, though we encourage customers to take great care that they are comparing like with like and not just compare on the headline price. As a simple example, different providers have different allowances in their plans for third party costs, which could materially distort a price comparison.
We also understand that some sites that claim to be price comparison sites are in fact introducer sites for individual plan providers and are not true comparison sites.
This is really a matter of choice and comes down to what best suits you. Clearly a lump sum involves a commitment of money up front, whereas instalments allow you to spread the cost. Most providers will add an instalment charge if instalments are spread over more than 12 months, so you should consider the financial impact of this.
You should also be aware that an instalment arrangement will normally require payment of outstanding instalments by your family if death occurs before all instalments have been paid.
There are insurance backed plans where no further payment would be required if death occurs before all instalments have been paid, though these usually have a period of up to 2 years where the value of the plan on death would be limited to a return of the contributions paid.
FPA Registered Providers do not hold the money you have paid for your plan. Instead they use it to either purchase a whole of life insurance policy on the life of the planholder, or to place the monies in a trust. The reasoning behind this separation is to ensure that if anything were to go wrong with the provider, the assets to pay for the funeral would be separated and ring-fenced.
The amounts to be paid out from either the trust or the insurance policy should be enough to pay for the funeral that the provider has committed to carry out for you reflecting the arrangements that have been made for the funeral. The FPA regularly check with registered providers to confirm this is the case, supported by actuarial assessments in the case of trust based arrangements.
A “nominated funeral director” is normally allocated, either at your specific request or by the funeral planning company. This will be the funeral director who will carry out the funeral, unless something else changes such as you moving home.
You will have a period of time in which you can cancel the contract and reclaim all monies paid. Once this period has elapsed, cancellation is still an option but a fee may be incurred. It is worth checking the details with your chosen provider so you know how long you have to cancel the contract without incurring a cost.
When death occurs, the nominated funeral director carries out the funeral according to the terms of the plan, and the trust or life insurance company pays the funeral director for doing so.
It is important to read the terms and conditions of the plan you are considering to verify what is covered. Frequently, third party costs, also known as disbursements, may not be covered in full as they are not within the control of a funeral director (e.g. medical fees, newspaper notices). If these costs are not covered, the plan may include an allowance for them. However, if at the time of death, these costs exceed the allowance, some additional payment may be required. It is also worth noting that plans do not normally cover the costs of a burial plot or interment fees.
The funeral plan should provide protection against the inflation of the funeral directors costs and therefore your family should not incur additional costs for these specifically. However, the area where they could incur additional costs is third party costs (also known as disbursements), where some plans provide a contribution to these (that generally increases with inflation) but may not fully cover them. You should make sure you understand how this works in your plan and ideally explain it to your family.
We recommend that you discuss the plan you have purchased with your family or your executor. You should also make sure they know who the plan is with, as it is their responsibility to inform the funeral planning company (provider) in the event of your death. This can also be done via your nominated funeral director.
The FPA is a regulatory authority and can provide you with general information around funeral plans and the market. However, we cannot provide any advice on individual providers or around your own personal circumstances.
The FPA can be contacted as follows:
The FPA does not regulate funerals or deal with complaints about funerals. We suggest that you discuss any complaints about funerals with the relevant trade body for the funeral director involved. The two major trade bodies are The National Association of Funeral Directors (NAFD) and The National Society of Allied and Independent Funeral Directors (SAIF).
FAQs for providers of funeral plans
There is no legal requirement for funeral plan providers to be registered with the FPA. However you will need to set up your plan so that it complies with the Regulated Activities Order Article 60 , or else be regulated directly by the FCA.
The registration process (both initially and annually) subjects your business and its operations to independent scrutiny. This provides additional reassurance to current and prospective customers that you are going above and beyond the minimum legal requirements, and that you are reducing the likelihood and impact of anything happening which could adversely affect them.
It should also benefit you, as your registration can act as something of a selling point for customers keen to purchase a plan from a registered provider. You will also benefit from objective input from our Compliance Committee.
The registration process requires you to complete a series of application forms and to provide detailed information of your business model. This will include items such as any Trust Deed, insurance agreement, accounts, actuarial valuations, investment arrangements and plan literature.
To start the process we suggest a conversation with our Chief Executive where we will seek to get an understanding of your model and assist you through the registration process.
The Chief Executive will confirm the exact costs at the time of application, but the model is a relatively small registration fee with on-going per plan fees that are intended not to be prohibitive.
All FPA registered providers must comply with our Rules and Code of Practice.
They are required to provide sufficient information in a timely manner which will allow us to assess this compliance on an ongoing basis. If they are found to be non – compliant in any areas, these must be addressed and remedied as soon as possible.
Complaints from customers must also be dealt with in line with the FPA Rules.
No. As a distributor you cannot become an FPA registered provider. To become a registered provider you need to provide plans and comply with our Rules and Code of Practice in doing so.
Yes. We encourage all of our registered providers to include the FPA logo on their website and on appropriate literature.
We also provide approved wording and templates to help you explain what FPA do, and what registration means to your customers.