24th July 2024
The Evolving Funeral Plan Market: How Providers Can Improve Transparency
How have prepaid funeral providers' offerings and journeys changed in light of regulation and what more can be done to improve?
When it comes to buying a funeral plan, customers face numerous decisions, making it tricky to determine the best option. Typically, providers offer a range of packaged options. However, in recent years, we've seen a shift towards fewer options and greater customisation.
This blogs explores the benefits and drawbacks of modular and packaged funeral plans, highlighting the key information that providers should clearly present during the purchase process so that customers know the benefits and drawbacks of different options.
Trends in Funeral Plan Offerings
Over the last 12 months, there’s been a reduction in the number of funeral plans offered by providers, with the average number of products dropping from four to three.
We’ve seen providers With Grace and Affordable Funerals streamline their product offerings in the past year: With Grace halved their prepaid options from twelve down to just six.
Dignity is an interesting exception to this trend. From 2022, they have offered a modular ‘create your own funeral plan’. While this approach allows for maximum flexibility, it can be more challenging for customers to navigate compared to choosing from a range of pre-packaged plans. While choice can be beneficial if presented clearly and simply, too much choice can lead to confusion.
Simplification vs. Complexity
Celebration of Life offers one of the simplest and best-presented propositions in the market, with just a single option. Their website clearly presents what is included and excluded, making it easy for customers to understand and make sure the product meets their demands and needs. However, having just one proposition does limit customer choice.
In contrast, providers like Avalon, Golden Charter and Open Prepaid Funerals might benefit from simplifying or slimming down their propositions to aid customer decision-making. While greater choice can be advantageous, too many options can overwhelm customers, making it difficult to determine which plan best suits their needs.
Tools for Improving Transparency
One effective tool that funeral plan providers are using to help customers make informed decisions is the use of ticks and crosses. The FCA has mentioned this as an example of good practice in a recent article. These tables are especially useful for informing customers of the limitations of products. Some examples of good practice can already be seen below, taken from a range of funeral plan providers’ websites.
Key Considerations for Providers
Regardless of how the journey and pricing are displayed, it is crucial that providers present important information clearly and simply before purchase.
When the FCA consulted on market regulation, their goal was to create a safer funeral plan market, ensuring consumers' plans would be delivered with no additional costs.
Several aspects of funeral plans can be made more transparent and improve customer outcomes:
Fees: Not all fees, such as doctors' or ministers' fees, are guaranteed. There can be a misunderstanding where customers believe there is no more left for their family to pay once they have purchased their plan. Providers must explain third-party cost allowances to ensure customers are aware their families might still incur additional expenses.
Cancellation Terms: Cancellation terms need to be more prominently displayed. They are often buried in the terms and conditions or FAQs, making them hard to find. Some cancellation fees can reach as high as £395, creating a significant barrier for customers wishing to leave. Additionally, for those who pay by instalments, some providers offer no refunds after 12 months. These conditions should be clearly communicated to customers prior to purchase.
Regional Pricing: One final thing for provides to consider is regional pricing. The majority of products on the market have one price for all customers regardless of where in the country they live, despite there being large variance in funeral costs across parts of the UK. It’s hard for funeral plan providers with one nationwide price to justify they are offering fair value for customers purchasing products in cheaper areas like Northern Ireland. To improve customer outcomes and offer fair value providers should consider introducing regional pricing models.
By addressing these issues, providers can help customers make informed decisions and increase confidence in their chosen funeral plans.
This article was amended on 19 August 2024. An earlier version referred to Pure Cremation only having a telephone purchase journey.