Am I too young to take out a funeral plan?
I am 46 and recently inherited a few thousand pounds. I would like to use the money to pay for my own funeral, but lump sum pre-paid plans seem to be targeted at the over-50s. The only option for me seems to be a monthly payment plan but that would not work with my lump sum.
I am unemployed and living on state benefits with no income to fund the monthly payments. Is there any way I can buy a lump sum plan?
A funeral plan allows you to organise and pay for your funeral up front at today’s prices. This can be helpful as funeral costs tend to rise faster than the rate of inflation.
However, different plans provide different levels of benefits, and with some of the cheaper policies it is likely there will be additional costs unless you have a very basic funeral. These plans also don’t tend to cover the costs of burial plots or headstones.
Many providers only offer their products to those aged over 50, as these are the people who are most likely to buy them. However, a limited number of providers offer plans to younger people. One is Safe Hands.
But why would you want to buy a funeral plan at your age, unless you are in bad health? If you are healthy, you could conceivably live for another 50 years and, as you are unemployed, you might have other uses for this money.
A much better idea is to save the money in a bank or building society. While it is unlikely to grow as fast as increases in funeral costs, the money will at least be there for you if you need it for other purposes.
Consider one of the high-interest current account deals (5% with Nationwide and TSB or 3% with Santander). With the new savings allowance of £1,000 coming in from April, you won’t pay income tax on your interest.
Moneywise adds: Before you think about spending the money or locking it away in a savings account, you must report the inheritance to your local benefit office.
If you deliberately fail to report a change in your personal circumstances, you are treated as having committed benefit fraud, which could lead to a fine or prison sentence.
Patrick Connolly is a certified financial planner for Chase de Vere.
An increase in the general level of prices that persists over a period of time. The inflation rate is a measure of the average change over a period, usually 12 months. If inflation is up 4%, this means the price of products and services is 4% higher than a year earlier, requiring we spend and extra 4% to buy the same things we bought 12 months ago and that any savings and investments must generate 4% (after any taxes) to keep pace with inflation. Since 2003, the Bank of England has used the consumer prices index (CPI) as its official measure of inflation (see also retail prices index).
An account opened with a clearing bank (few building societies offer current accounts) that provides the ability to draw cash (usually via a debit card) or cheques from the account. Some pay fairly minimal rates of interest if the account is in credit. Most current accounts insist your monthly income (salary or pension) is paid directly in each month and they offer a number of optional services – such as overdrafts and charge cards – which are negotiable but will incur fees.
This is a mutual organisation owned by its members and not by shareholders. These societies offer a range of financial services but have historically concentrated on taking deposits from savers and lending the money to borrowers as mortgages, hence the name. In the mid-1990s many societies “demutualised” and became banks. One academic study (Heffernan, 2003) found demutualised societies’ pricing on deposits and mortgages was more favourable to shareholders than to customers, with the remaining mutual building societies offering consistently better rates. In 1900, there were 2,286 building societies in the UK; in 2011, there are just 51.