Personal Finance/Wealth Management
Thousands Left In Limbo At The Collapse Of A Prepaid Funeral Plan Provider
Affected customers can make claims as creditors in the administration process
The carelessness and carefree attitudes of today's children make older adults want to organise their funerals well in advance, in a way that befits them. A funeral plan is where you purchase a funeral service (usually includes a basic coffin, collection of the body from the morgue, dress it up, take it to the church for a service, and then for burial).
The plan is paid for in advance, or some companies allow instalment payment. It is NOT an insurance policy where a lump sum is paid to your loved ones, but a funeral service offered to your loved one which you have paid for in advance.
What Is A Prepaid Funeral Plan?
Prepaid funeral plans are like making a payment today to secure your funeral, in a way to support your loved ones with the expenses that may arise in burying you the way you want.
It’s not a life insurance policy, as it doesn’t pay out a lump sum — it’s a plan where you pay today’s prices for the services it includes.
In today’s global village, children live far and wide, far apart from their parents, and it may not always be possible to be present to organise the funeral in a way that the deceased prefer. Funeral in itself is also getting expensive, and it makes sense to prepay, as a way to tie down future inflation.
Prepaid Funeral Plans Used To Be An Insurance Company Product.
Prepaid funeral expenses used to be a product of Regulated Insurance Companies, before being hijacked by individual private organisations. Unfortunately, these individual organisations are not regulated, like the Insurance companies, yet people still patronise them, nevertheless.
The Financial Conduct Authority (FCA) however will start to regulate private organisations selling pre-paid funeral plans from the 29th of July of this year, making all others put their house in order. This means that if a company is not able to meet the required standard, it will not be allowed to sell the product.
The life term that used to be an insurance company product guarantees a particular lump sum at death. The problem with that is that inflation will erode the value of this lump sum, and it will amount to nothing, compared to what actually is spent on the funeral.
What people don’ know is that Insurance companies are highly organised, and have actuaries to calculate possibilities and deposits that making them a strong pillar in periods of crisis.
What Immediate Action To Take If Affected
The company is named Safe Hands Dignity Funeral Limited and promised to fulfil its obligation till April 20, 2022. Any other customer can apply to their administrator and be treated as a normal creditor.
Stop any further payment to them, including cancelling further direct debit, and apply to retrieve recent direct debit under the direct debit guarantee.
Do not listen to anyone claiming to want to be from Safe Hands, and asking for your account number to credit your account with what you have paid. Simply put, do not rule out the scammers will want to have a field day.
The Financial Conduct Authority has asked any other private companies out there in the same business to apply for authorisation. If you are dealing with a company that has not, then you should be cautious whether you need to continue to pay your money to them.
Check whether the company you deal with is registered with Funeral Planning Authority. This is a non-obligatory registration that gives credence to members who adhere to a certain code of conduct and rules.
The Takeaways
- The average cost of a funeral, like all other expenses keeps going up, and it is a journey that we all must undertake.
- A prepaid plan guarantees you tomorrow’s funeral services irrespective of the cost. You choose what and how you want your funeral to be.
- Funeral plans are only for those over fifty years and must be within the United Kingdom.
- Funeral plans cover the cost of a setlist of burial or cremation services and will let you include what’s important to you.
About The Author
Lanu Pitan is a Nigerian ex-pat living in the United Kingdom. She is a Chartered Accountant for many years before she retired as a Group Head Finance of a Publicly quoted Insurance Company. She now manages her own small operation.
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