Funeral directors' forward payment plans keep prices at current levels

When a parent, spouse or other close relative dies, having to deal with money at the time of such trauma seems cold and vulgar. Yet funerals are a major expense and paying for them can be a source of great worry for elderly people on restricted incomes. Insurance companies say that small life policies, designated specifically for funeral expenses are often maintained by pensioners at any cost, in order to avoid the ignominy of a pauper's send-off. Being buried with dignity is a matter of honour in this country. A second funeral directors' company Kirwan has now launched an Advance Funeral Arrangements Plan in association with Bank of Ireland Trust Services. (The first, Fanagans Funeral Directors, launched its scheme with Bank of Ireland 18 months ago). While the idea of buying your own funeral (or someone else's) in advance of death may seem a bit gruesome, these schemes are very popular in the United States, where 28 million people own one. The businesses that sell them are projecting that up to 5,000,000 more will be bought in the year 2000 alone. In Britain, 220,000 advance funeral policies have been sold since the product was launched there a few years ago.

Here the trend is also gathering momentum, says Mr John Kirwan of Kirwan Funeral Directors: "We have had many enquiries in recent times. It makes total sense for people to plan for what is an inevitable expense and with this scheme they can do so in peace."

When Fanagans launched its service in March 1996, its managing director, Mr Alan Fanagan, compared the service to "writing a Will many people want the peace of mind knowing that the burden, both financial and emotional, of arranging their funeral has been lifted from their family and friends. By doing so people are making a decision that will be of benefit to their family at a most difficult time".

The biggest selling point of these advance payment schemes is that the funeral is paid for at current prices and there is no additional charge, even if the insured should die many years in the future. Because the payment is lodged in the Bank of Ireland Trust Scheme, inflationary or cost increases are met by the investment fund and there is no balance billing at the actual time of the funeral. The other obvious attraction is that the insured can dictate any special wishes for the funeral: for example the choice of coffin, transport, flowers and church music. Both the Fanagans' and Kirwan's plans can be purchased by a lump sum, or by instalments over 12, 24 or 36 months. The payments are lodged directly into the Trust Account managed by the bank, acting as the Custodian Trustee.

The client is given a certificate of proof of payments and the plan can be cancelled at any time with a full refund of payments plus interest.

The proceeds of the plan are payable tax-free upon production of an invoice confirming the death of the policyholder and that the funeral has taken place.

The Bank pays the funeral directors directly, so the next of kin have no financial outlay whatsoever. So what is the average price of a funeral in 1997? According to Kirwan, most funerals cost between £1,500 and £2,500, not including the purchase or opening of the grave. (A gravesite at Glasnevin will cost £455 and typical opening fees can vary between £135 and £330.) These latter costs are not covered by these advance purchase plans because their costs, say Kirwan "have escalated many times above inflation over the past decade or two. Bank of Ireland could not take the risk that the future cost of grave purchase would be matched by the Trust funds investment return".

A typical funeral includes the coffin, hearse for removal and funeral limousines, funeral home charge, administration, transportation from place of death, preparation of the deceased, estimates for obituary notices, church offerings, bank administration fees, wreaths, organist/singer, a habit or shroud, a doctor or coroner's fee if there is a cremation and an acknowledgement notice. Some of these latter features are optional.

Paying the policy by instalments will cost up to 9 per cent more than paying by lump sum. A typical £2,000 funeral will cost £2,060 if you purchase it with 12 instalments of £171.66 each; £2,120 by 24 instalments of £83.33 and £2,180 if you buy it by 36 instalments of £60.55.

According to Bank of Ireland the rate of simple interest works out at 3 per cent per annum, calculated on the total cost.

Kirwan is proud of the fact that it buried the late Douglas Hyde, the ex-President who died in 1948. His state funeral took place at St Patrick's Cathedral and his remains were taken to their final resting place in Roscommon, says John Kirwan.

And the cost? "Just £48.00". A sum that could hardly be matched at today's prices. (For free booklets about the advance funeral arrangements plans contact Kirwan Funeral Directors at (01) 833 4444 or Fanagans Funeral Directors at (01) 475 4101.)