The cost of living has risen astronomically over the last fifty years and this has meant that people have had to be increasingly careful about how they manage their money. As a result, a number of different options have emerged with the aim of giving people a way to save money for their family when they die. ISAs, over 50s plans and prepaid funeral plans; old age is a valuable asset for financial service providers.
Death can be a time of emotional turmoil for families, but can be a period of financial worry. With an average funeral and burial in the US costing between $7,000-$10,000, the cost of death is very high. Planning your finances or arranging a funeral plan whilst you are alive can seem like a rather ominous or disturbing thought, but with funerals now costing more than ever before, it is something which you are likely to need to consider. Do you leave it to your family to try and arrange your finances after death or do you explore your own avenues whilst you are alive? In order to make the most of your hard-earned money, it is important to consider your finances carefully. Here we look at some of the options that are available to you in order for you to save money in old age.
Over 50s Plan
An over 50s plan is available to anyone over the age of 50, regardless of health. The idea is that you pay a fixed amount each month into the plan, with the guarantee of a specified fixed sum to be paid out to your family after your death.
There are of course some conditions to this. Many plans require you to live for two years in order to fulfill the conditions of the plan. But as long as you do this, your family will receive a fixed sum after you die. This can work in your favor, but with the average age in the US rising year upon year, what is the likelihood of you losing out from the plan? For someone paying in $10 a month with a payout of $1000, you will save for 100 months. This means that by the fifth month of your ninth year after taking out the plan, you will have started losing money. Although the your fixed payout is based on your life expectancy, the lack of flexibility is a huge negative factor for over 50s plans. Furthermore, if you find that you can no longer afford payments into the plan, the provider has the ability to take your savings, meaning that you or your family will never see a penny of it. Do you want to miss out on your hard-earned cash?
Cash ISAs are a reliable way of saving your money. High interest rates and no tax, they are a sensible way for you to store your money in old age. Complications occur, however, when you die and your family want to access the money. Your account will be subject to inheritance tax, meaning that your family could miss out on some of the money you have put aside for them. However, it is a great way of securing your money over a long period of time and accumulating interest.
A Prepaid funeral plan allows you to start saving for the specific purpose of your own funeral. With funeral prices rising constantly over the past few years, this is a new and interesting way to cover an expensive cost which would otherwise be placed in the hands of your family. Unlike over 50s plans, a prepaid funeral plan will return exactly what is put into it, albeit in the form of a funeral. You can choose to spread the cost of your plan out over a number of years for no extra cost. The funeral plan could also help your money go further as they will freeze the cost of your funeral at a current price, meaning that inflation will not diminish the value of your savings. You can also go some way in helping decide how you will be remembered, and where you want to be buried.