The latest supermarket to enter the Over 50’s/Funeral Plan market is Asda. They are by no means the only ‘everyday brand’ to offer ‘end of life’ services with Tesco Funeral Plans and Post Office Funeral Plans becoming regularly searched for terms. But what is an Asda Funeral Plan and how exactly do they work?
Where do Dignity Funeral Plans fit in?
Funeral plans from Dignity are a long-established brand on the funeral-plan market and are linked with Asda Over-50s plans. However, the link with Dignity funeral plans is misleading, because the Asda Over-50s plans are not true funeral plans. Instead, they are a form of insurance designed to cover the costs that arise when someone passes away, not to pay specifically for a funeral. On most of the plans, the insurance won’t be paid out unless the purchaser survives for two full years after purchase, although a plan is available that pays out after only six months.
Cover of this type is relevant in many circumstances and, often used in conjunction with funeral plans to give additional benefit to the family. Here is some information on Asda’s Over 50’s Plan . This is by no means financial advice but simply some of the queries often surrounding these types of ‘End of Life’ services along with the available details relating to Asda’s own product.
1. How much do you want to pay each month and how much do you want to receive when the plan is activated? Remember to take inflation into account, because it will reduce the value of the sum you receive after two or more years have passed. The cost of funerals is currently rising three times as fast as standard inflation, so the value of an Asda Over-50s plan may shrink by 50% or more in only eight years. Your family will have to cover the gap.
2. Beware of not capping your payments, otherwise you may pay in more than the plan eventually pays out. You can choose to cap the premiums, but then you have to pay more. These are more big disadvantages of Asda Over-50s plans and more reasons to ask why the regulators have ignored their bad value for money.
Death & Taxes
3. When an Asda Over-50s plan is activated, the pay-out will usually go direct to your estate and become liable to inheritance tax. Have you taken this into account when planning your monthly payment and calculating where the money you finally receive will go? Inheritance tax could swallow 40% of the pay-out and even delay it by six to twelve months, meaning that it can’t be used for the exact thing you purchased it for: covering the costs of the funeral.
4. An Asda Over-50s plan gives you no cash-in option. If you need to cancel the plan or find yourself unable to pay the premiums, you won’t get any of your premiums back and there will be no lump sum for your family when you pass away. Unless you have taken the more expensive option of capped premiums, in which case Asda will return your money without interest when you pass away. But only after you have paid the full cost of the death benefit! In effect, you will have given Asda an interest-free loan for an extended period before receiving the money back, much reduced in purchasing power by inflation.
5. If you pass away within a year of the plan’s commencement, it will pay out only the premiums you’ve paid in. Asda Over-50s plans have both good and bad features, but in our view the bad features strongly outweigh the good. A pre-paid funeral plan is nearly always a much better choice if you are able to afford one. You will know exactly what you are getting and because it is specifically designed to cover the cost of a funeral, you will be protected against all future rises in funeral costs.
Over 50’s Plans and Funeral plans are two completely different’ kettles of fish’, and offer different benefits to the consumer. If you would like to know more about Safe Hands Funeral Plans, and how our options compare to the other Funeral Plan Provider, visit our Compare the Funeral Plans Market area.