James Walker: Funeral plan may be the last thing you need

If you've caught daytime TV recently, then you won't have been able to miss ads for funeral plans. I groan every time I see one '“ and the awful way they play on your emotions to get you to buy into a plan you don't need.

The cost of flowers is not usually covered

Let’s face it, no-one really likes talking about funerals. But it’s really important to plan ahead for some things, like preparing a will, what you want to happen to the things you love and especially what music you want at your funeral/life celebration/mystical pagan rebirth ceremony.

Funeral plans might seem like a good idea on paper. For a lump sum payment or a series of instalments, you can cover the cost of your funeral so there’s less pressure on your loved ones. But the plans have had quite a bad press lately because they’re not great value for money. In addition, the plans often have been sold using high-pressure sales techniques targeting more vulnerable people. The sales teams often receive commission for these sales and the admin charges and fees of the plans can be really high.

So what do you do if you want to save up to cover things like funeral costs? Here’s how the plans work – and some alternatives.

◆ Funeral plans are designed to pay for the costs of your funeral. But there are lots of things that they don’t cover, commonly flowers and headstones – and even the burial plot. Make sure you understand what is and isn’t covered. Think about what you want and make a list so you’ve considered everything you might need to pay for.

◆ You pay over instalments or in one lump sum payment. But there are costs for cancelling the policy and for paying by instalments, and it doesn’t build up interest or insurance like an investment. Some charges are hefty too, so don’t throw away your money.

◆ Funeral plans are a bit like savings clubs: they aren’t regulated financial products, so you’ve got less consumer protection, though there is a scheme to help if one goes bust. In a nutshell, your money doesn’t really do any work for you. So why not consider other options?

◆ Sort your will out so your estate pays the costs. Getting a will drafted is so important. You can set aside money from your estate for your funeral and your bank will release usually up to £20,000 straight away to cover funeral fees without putting your family through the perils of probate.

◆ Savings and investments. Okay, so saving rates are a bit rubbish at the moment, but there are still a few good deals out there. Either way, look into an ISA so your money is tax-free. You can also invest with ISAs, but even though they’re one of the more responsible investments you can still lose cash, so bear that in mind.

◆ Take out a life insurance policy. Lots of people take out policies that pay out when you die. But bear in mind, if you live a long and healthy life, it’s possible you could pay more in premiums than you get back out.

◆ Don’t leave your money under the bed. Honestly, you wouldn’t believe how many people still do this. Bear in mind that cash is often changed and updated – and notes and coins stop being legal tender after a while. So a shoebox full of £50s can become just a box of paper.

Sadly, lots of the complaints I see after people have died come from relatives who are in dispute over wills, bills and worse. So, if you are going to plan for the future, make sure you tell the ones you love what you want to do. And pop it in the will.

James Walker is the founder of online complaint-resolution service Resolver.co.uk