Halton Borough Council has issued a warning after a Widnes resident was scammed out of thousands of pounds after investing in a pre-paid funeral care plan.
The resident was cold called by a company offering funeral plans and he agreed to them visiting him in his home, where he signed up to the plan and paid a one off sum of over £3,000.
He later found out the company had gone into liquidation leaving him out of pocket, with little prospect of recovering the money paid and no funeral plan either.
It is thought more than one million of these plans have been sold in the UK, many of them purchased by older people to prevent their loved ones being burdened with the costs of their funeral in the event of their death.
While there are many reputable companies out there, there are also a number of rogue traders operating in the industry. Sometimes traders simply go into liquidation, taking your money with them.
Other rogues in the industry operate what is referred to as “quasi-Ponzi schemes”, whereby they use money collected from new customers to pay out on any claims received.
This is essentially a hand to mouth way of running the business and has the potential to collapse at some point in the future.
Some points you may want to consider when looking at purchasing a funeral plan, or if you already have one:
1. The provider may have an exclusive agreement with a local Funeral Director, which would prevent your family from going with someone else.
2. The total cost of the plan may equate to more than the amount your family will receive in the event of your death, e.g. the plan may only pay out £3,500, but it may be costing £6,000 – the difference falling to administration costs, agency fees, etc.
3. The plan may only cover the basics of the funeral with your family having to pay for any additional extras, which might add up.
4. Some plans will need to be paid in full before the provider will pay out, e.g. on a £6,000 plan with £3,500 cover, the outstanding £2,500 would need to be paid first.
5. Some plans may be cancelled if you miss a single payment at any point, with all monies paid to date lost.
Undoubtedly there are some good funeral plans and providers in the market place, but an alternative might be a simple ISA or life cover policy. If in doubt talk it through with your family or financial advisor.
If you or somebody you know has been caught out by a scam please contact one of our specialist officers, Linda or Sue on 0151 511 8785 or 0151 511 8775, who are already working with people in Halton who have lost thousands of pounds to scams.
If you need advice on anything else please contact the Citizens Advice Consumer Helpline or 03454 04 05 06