Pre-Paid Funeral Plans: How They Work and Your Protection

A pre-paid funeral plan lets you arrange and pay for your own funeral in advance, usually at a fixed price agreed today rather than whatever funerals cost when the time comes. You pay either a one-off sum or instalments, and the plan is then meant to cover the funeral services set out in the contract. Plans are sold either directly by the provider or through third-party intermediaries¹.

Since 29 July 2022, funeral plans have been regulated by the Financial Conduct Authority (FCA), which brought with it a guaranteed 30-day full refund if you cancel, access to the Financial Ombudsman Service for complaints, and protection from the Financial Services Compensation Scheme (FSCS) up to £85,000 per eligible person, per firm if your provider goes out of business¹. Around 1.6 million people in the UK have a funeral plan².

What a pre-paid funeral plan is and what it covers

A pre-paid funeral plan is a product that lets you pre-arrange and pre-pay for your funeral with a provider, generally for a fixed cost. You can pay a single one-off premium or spread the cost over instalments, and the plan is sold either directly by the provider or through an intermediary¹.

What the plan actually pays for is set out in the funeral plan contract, and this is the document to read before buying. The costs a funeral typically involves include the funeral director's services and the local council's burial or cremation fees³. A plan may cover some of these and not others, and the differences between plans are usually about what is inside the package: the coffin, the collection and care of the person who has died, the funeral director's attendance on the day, and contributions towards burial or cremation fees. Anything outside the contract has to be paid for separately by your estate or your family at the time.

It is worth being clear about what a funeral plan is not. It is not the same as a pre-funded care plan, which is a different product where the customer pays premiums into a plan while they are still healthy to help cover the cost of nursing home or home care in the future⁴. It is also not life insurance: an over-50s life policy pays a cash sum to your family, which they can spend on anything, whereas a funeral plan pays for agreed funeral services. Whole of life assurance claims are covered by FSCS at 100% of the claim⁵, but the product works differently from a plan that buys a funeral directly.

A plan can also affect means-tested help with funeral costs. In Scotland, when Social Security Scotland checks what funds are in the estate of the person who died, it deducts any money from a pre-paid funeral plan that has not been paid in full, and any sum awarded that is also covered by the funeral plan, for example the burial or cremation cost⁶. Where a plan or similar arrangement was paid for in full before the death, the amount payable under it for the types of costs described in the regulations is deducted; where it was not paid in full, the sum payable under it is deducted⁷. The practical point is that a fully paid plan is treated differently from one with instalments still outstanding.

The rising cost of a funeral is why most people buy

The main reason people give for buying a plan is the price of funerals itself. The average cost of a basic funeral in 2021 was £4,056, an increase of 121% since 2004². The Competition and Markets Authority found the average cost of a funeral was nearly £3,800 in 2017, not counting extras that can add another £2,000 to the total bill⁸.

Rising costs have a direct effect on families. Research for Parliament found that 14% of those surveyed in 2014 struggled to pay for funeral costs⁹. The same research noted that help with funeral expenses through the social fund was capped at £700 for expenses such as funeral directors' fees, a coffin, church fees and flowers, a figure unchanged since 2003⁹, even as the cost of the funeral itself more than doubled over the following years.

A plan fixes the price of the funeral services in the contract at today's cost, which is what protects the buyer and their family from future price rises for those services. What it does not do is protect against everything: items outside the contract still have to be paid for at whatever they cost at the time. The comparison between a pre-paid funeral plan and saving the money yourself sets out the two approaches side by side, and our guide to paying for a funeral covers the costs and the help available.

How much a funeral plan costs and where commission fits in

The price of a plan depends on what it covers and how you pay for it: a one-off premium or instalments, with instalment plans typically costing more in total because they run over time¹. There is no single market price, and the figures that matter are the ones in the contract you are offered: the total amount payable, what happens if you miss an instalment, and what the plan guarantees to cover.

One cost that is built into many plans is commission paid to the person who sells them. A 2018 report by consumer group Fairer Finance found commissions of up to £900 per funeral plan, and a small but significant minority of firms were using aggressive sales tactics². That commission is paid out of what you hand over, which is one reason to ask directly how the seller is remunerated before signing anything. Since regulation began, sellers of funeral plans must themselves be authorised by the FCA¹.

Once the plan is in place, the FCA's rulebook restricts what a provider can demand from you or your estate. A funeral plan provider must not seek or obtain further payments from the customer or from the covered individual's estate to secure the funeral services set out in the funeral plan contract, other than in the limited circumstances set out in the FCA's rules¹⁰. In practice this means the provider cannot come back to your family after your death asking for more money to deliver the funeral it agreed to provide, beyond what the contract itself allows.

Who sells funeral plans and how the market is organised

Funeral plans are sold through two channels: directly by the provider, or through third-party intermediaries¹. The government's 2018 consultation on the market sought evidence on how it operated, particularly the types of business models in the sector, both for providing plans and for distributing them¹¹.

The market is large and has grown quickly. Around 1.6 million people in the UK have a funeral plan, and 218,000 took out their plan in the year before regulation was introduced². In Scotland, the Funeral Support Payment statistics to 31 March 2026 show the scheme had paid 36,225 individual clients at least one payment since launch¹², and where the person who died had a fully paid pre-paid funeral plan, the standard flat rate payment for applications made from 1 April 2025 to 31 March 2026 was reduced to £156.10¹². The flat rate payment where there was a pre-paid funeral plan is £162.05¹³. These figures show how common plans now are: the benefits system itself has special rules for people who had one.

Since regulation began, the boundary of the market is defined by the Financial Services Register. Funeral plan firms that are not on the register must not sell or carry out funeral plans in the UK; they will have transferred their plans to an authorised provider or begun to wind down their business¹. Providers leaving the market can make use of rules designed to make it easier to transfer their existing funeral plan contracts to another funeral plan provider for regulatory purposes¹⁴. If you are considering a plan, checking that the firm is on the register is the single quickest way to confirm you are dealing with a regulated business.

Regulation: FCA rules for funeral plans since July 2022

On 29 July 2022, any financial business that sells and provides funeral plans became regulated by the Financial Conduct Authority¹⁵. From that date, the FCA began regulating firms and intermediaries that provide and distribute funeral plans¹⁶. This followed a long policy process: the government's initial consultation on the market opened in June 2018, a further consultation on bringing plans within the FCA's remit followed in June 2019, and the government published its response on 11 March 2020¹⁷. In January 2021 the government legislated to bring all pre-paid funeral plan providers and intermediaries within the regulatory perimeter¹⁴.

The government's view, set out in the 2018 consultation, was that the self-regulatory framework for the funeral plan sector was not sufficient to ensure the fair treatment of consumers and that a more robust regime was required¹¹. The consultation that followed concluded that bringing funeral plan providers within the remit of the FCA would be the most effective policy response for strengthening consumer protection¹⁷.

The rules themselves are in the FCA's rulebook. One chapter, FPCOB 14, concerns the conduct of a funeral plan provider in relation to the redemption of a funeral plan contract upon the death of the covered individual¹⁰: in other words, how the provider must behave when the funeral it has been paid for has to be delivered. The rule against seeking further payments from the customer or the estate, described above, comes from the same chapter¹⁰.

Cancelling a plan: full refund within 30 days

Regulation guarantees that customers get a full refund if they cancel a plan within 30 days, or a refund minus a reasonable admin fee if they cancel after that². The 30 days run from the start of the contract, and the refund right applies to plans bought since regulation began on 29 July 2022.

If you cancel after the 30 days, the FCA's rules on distance contracts set the limits of what the provider can charge. The consumer may be required to pay, without any undue delay, for the service actually provided by the firm in accordance with the contract; the amount must not exceed an amount in proportion to the extent of the service already provided and must not be such that it could be construed as a penalty¹⁸. There is a further protection: in no case may the firm require such payment if it has commenced the performance of the contract before the expiry of the cancellation period without the consumer's prior request¹⁸. A firm that jumped the gun and started arranging your funeral before the 30 days were up, without your asking it to, cannot charge you anything for cancelling.

FSCS protection if your plan provider goes out of business

If you have a funeral plan and your provider has gone out of business on or after 29 July 2022, you may be FSCS protected, and this includes funeral plans bought before that date¹. The protection is worth up to £85,000 per eligible person, per firm, for all types of funeral plan claims¹⁹. Funeral plans sit alongside banks and building societies, credit unions, pensions, investments, mortgages, insurance and debt management in the range of products FSCS covers¹⁶.

Your provider must be regulated by the FCA, and you can check this on the Financial Services Register²⁰. That check matters because protection depends on the provider being authorised when it fails.

When a provider fails, FSCS asks the customer whether they want to receive replacement cover before the process completes; if they do not, they can receive compensation instead¹⁶. FSCS may also be able to help with the provision of a funeral if the plan holder passes away after the provider fails, before a replacement contract or compensation is secured and the insolvency practitioner cannot secure provision of the funeral¹⁶. This is an important detail for anyone mid-claim: the funeral does not simply fall through the cracks between the failure and the payout.

Complaints and the Financial Ombudsman Service

If you have a complaint against a funeral plan provider or intermediary that is currently trading, you may be able to refer it to the Financial Ombudsman Service, but only after first complaining to the provider¹. Customers of funeral plan providers have access to the ombudsman and can bring a complaint to it if they are not able to resolve the matter directly with their provider¹⁵.

The process runs in a fixed order. You make a formal complaint to the company involved first²¹. The firm must get back to you within 15 days, either with a response to your complaint or to explain why it cannot yet give one, and it must send a final response within 35 days²². If the firm does not send you a final response letter within eight weeks, or you are unhappy with its response, you can bring the complaint to the ombudsman²¹. Once the ombudsman issues a final decision and you accept it, the firm usually has 28 calendar days from the date the ombudsman informs the business that you have accepted the decision to pay any compensation²³.

Complaint volumes give a sense of how often things go wrong. The ombudsman received 289 complaints about funeral plans between 9 July 2023 and 8 July 2024²⁴, and 271 in the following year, 9 July 2024 to 8 July 2025²⁵. In the first half of 2024 it recorded 140 complaints in the funeral planning services sector²⁶, and in the first quarter of 2026/27 it opened 35 complaints about pre-paid funeral plans²⁷. The numbers are small compared with banking or insurance, but they show the route is used and that disputes about plans are being resolved through the official channel.

Where to find more help

Free, official help is available at every stage of deciding on, buying or complaining about a plan. The FCA's Financial Services Register, at fca.org.uk, shows whether a firm is authorised to sell funeral plans²⁰. The Financial Services Compensation Scheme explains what is covered and how to claim¹, and the Financial Ombudsman Service handles complaints that a provider has not resolved²¹.

For the wider costs of a funeral and the help available with paying for one, our guides cover paying for a funeral, the Funeral Support Payment in Scotland, the Funeral Expenses Payment elsewhere in the UK, and paying for a funeral from the deceased's bank account before probate is granted. If you are weighing a plan against putting money aside, the comparison of a pre-paid funeral plan and saving yourself sets out the options, and our bereavement checklist covers the practical steps after a death.