Funeral Benefit Options: a guide
With funeral expenses often a significant source of stress for those over 50, many people clearly want to make sure the costs of their funeral are covered when the time eventually comes.
Covering future funeral expenses is the purpose of a funeral plan, however the Funeral Benefit Option (FBO), through a guaranteed over 50s product, offers policy holders another way of planning ahead.
So how does the funeral benefit work? It really is very simple. If the policy holder has opted to include the Funeral Benefit Option in their insurance policy, when they pass away the surviving family will contact you, the funeral director, in the same way they would if they had a funeral plan.
You then arrange the policy holder’s funeral and present an invoice to Golden Charter, and we will arrange payment in the normal way. The funds for payment of the invoice will come from the insurance company, with whom Golden Charter will liaise throughout the entire claims process.
If the invoice amount is less than the sum assured then the remaining balance will be settled through the policy holder’s estate. If the amount of the invoice is higher than the sum assured, the family will be responsible for the balance due.
In simple terms, a Funeral Benefit Option is an at-need funeral from the funeral director’s perspective. As an incentive for the policy holder to choose your business, a contribution of £300 towards the cost of the funeral services is required, which can be in the form of a discount off the total price or of added value services, for example an additional car or upgraded coffin.
It’s important to note that competitor insurance policies with an FBO included offer similar incentives.
The market
Despite the exit of many high street banks from the financial advice market in 2012, the guaranteed over 50s market continues to grow through independent providers and insurance specialists.
In 2018, the market grew by 2%, meaning 297,798 customers took out this type of insurance. With the vast majority of these policies taken out to deal with funeral expenses, it’s essential Golden Charter acquires as much of this type of future funeral business on behalf of independent funeral directors as possible.
Our own experience with FBOs shows that the average sum assured continues to increase considerably. The current average sum assured for the 50,000 FBOs allocated by Golden Charter between April 2019 and January 2020 was £4,750, a significant amount and greater than the cost of most at-need funerals today.
That’s an average of 1,250 future funerals going to the independent sector each week, instead of the Co-op or Dignity.
Why FBOs are a good choice for funeral directors
As previously stated, the average sum assured for each Funeral Benefit Option is significantly above the average cost of a funeral, providing you with a significant at-need funeral contribution.
Where sums assured seem to be lower than the average quoted, view these as down-payments for the funeral, as the family or next of kin are required to make up the shortfall for the funeral service provided by you. This is always made clear to the customer at the point of sale by all our partners, as well as being explicitly clear in the membership pack sent by Golden Charter.
Most importantly, by supplying over 50s providers with our Funeral Benefit Option product, we ensure that a significant number of funerals are not allocated to any of our funeral planning competitors, which can only make great business sense.
Golden Charter’s Funeral Benefit Option partners
- British Seniors
- Shepherds Friendly
- Fiftylife
- OneFamily