I stumbled across this BBC article last night about a funeral firm which went bust leaving all of its customers without the funeral plans they'd spent an average of £4000 on...
It sounds like a simple case of fraud, I mean the normal approach to running such a firm would be to run it like a pension company, making very safe investments, just enough to cover expenses, wages and obviously some profit.
So a little risk may be acceptable, but in this case it looks like customers are going to get back something in the region of 7 pence for every pound they paid, which kind of suggests that most of the £75 million they'd received over the years has been invested extremely wildly, or it's just been spent.
I mean such a company should have around 50% Vested in something like bonds, most of the rest in safe companies such as Microsoft or the like and punting with 10-20%, in which case you'd expect customers to be getting back 30-50% of their funds, I mean even when Celcius went bust I ended up getting back a decent chunk of my vest, this particular case really does look criminal. It has been referred to the fraud office.
What's the point in getting a funeral plan anyway...?
Around 1.6M people in the UK have them, paying an average of £4K to have the peace of mind that their funeral is taken care of already, so their loved ones don't have to think about it.
But I can't help but think this is an example of the over-organised exposing themselves to unnecessary risk, at least if you're going with one of the smaller companies, there are 65 of these in total, some of them are going to be cowboys.
An alternative...
Just put some money in a regular investment account and ring fence £4K in your will along with specific instructions of what you want at your funeral, basically agree a plan that you want with a company and then have your son or brother or whoever pay for it with money.
I get that wills may only be read after a funeral, so you'd maybe have to transfer the money to someone well in advance or put it in some sort of trust only to be accessed by a trusted person after your death.
And if you don't trust anyone enough, well who cares what happens at your funeral, it's not as if you'll be around to see it, and the chances are if you don't trust them they're not going to give a shit anyway if you end up having a crap funeral.
Final thoughts..
I mean I get why people organise said plans, it takes the stress and possible arguments out of organising a funeral, but it also seems like a great way of exposing £4K or so to risk and no return in all of that time either!
I guess they make sense if yer diagnosed with dementia too.
However I can't see myself setting one up, I'd rather just leave cash to people and let them decide to give me a cheap cremation, I don't give a shit about bring remembered during a short 1-2 ceremony, doesn't seem a lot of point!