Ask the Expert: How should I save for my funeral?
Our reader this week wants to know whether an over-50s plan is the best way to save for a funeral. Carl Lamb of Almary Green responds.
I know it sounds morbid but I’ve been thinking lately that I should make some provision to pay for my funeral when I die – even though I’m pretty healthy.
I’m aged 69 and I don’t have much saved up but what I have is sitting on deposit in my building society getting very little interest. I have seen advertising for an over 50s plan that would pay out when I die – is that worth doing?
Response from Carl Lamb of Almary Green
There are a range of different plans and schemes that aim to help pay funeral costs but very few of them will deliver inflation-beating returns and those people who enjoy a long life may well end up paying in more than they get back.
They also require you to continue paying in without fail until either you die or you reach the maturity date (usually age 90), so there is no flexibility if you suddenly can’t make the payments.
It’s true that bank and building society accounts give low interest rates but if you are able to commit your money for a fixed amount of time – three or five years at a stretch perhaps – then you may be able to get a better rate.
You could use your ISA allowance and place your savings in a cash ISA or a stocks and shares ISA, up to the annual limit (currently £20,000). A stocks and shares ISA does have the potential to deliver higher returns than a cash ISA but equally could lose value, so this is something that should only be considered if it’s in keeping with your attitude to risk.
Going down the ISA route will give you flexibility in terms of what you pay in and when you take it out (depending on the terms of the account), which may be helpful if you have unexpected needs in the future.