Can You Cancel a Prepaid Funeral Plan and Get Your Money Back?

Detailed Explanation

People cancel prepaid funeral plans for ordinary reasons: they move, they change their minds about burial or cremation, they lose confidence in the provider, or they need the money. A prepaid plan is a contract, so whether you can cancel, and how much comes back, is decided first by its terms and then by the law where it was bought. The law differs a lot between countries and, in Australia and the US, between states. If you're not sure what kind of plan you have, what is a prepaid funeral plan explains the main types.

Three things decide the answer

1. Timing. Cancelling within a cooling-off period straight after signing usually means a full refund. After that, fees and deductions are more likely.
2. The contract. It sets any administration or cancellation fee, what happens to interest or investment growth, and what happens if instalments stop.
3. How the money is held. Money in a trust or registered fund is usually refunded by, or through, the trustee. Money used to buy an insurance policy is subject to the policy's terms, which may give back less than was paid. Some arrangements are deliberately locked.

The cooling-off period

Many systems give buyers a short window to change their minds without cost:

• United Kingdom: FCA rules give funeral plan customers a cancellation period of at least 30 days to cancel without giving a reason and without paying anything. The provider must return the money without undue delay, and no later than 30 days after being told.
• Australia: it depends on the state. In New South Wales, funeral directors must give a 30-day cooling-off period on prepaid funeral contracts, and cancelling within it carries no financial penalty. Other states have their own rules.
• United States: there's no single national cooling-off rule for preneed contracts. State law and the contract decide.

Cancelling after the cooling-off period

Once any cooling-off window has passed, the contract usually decides. Many plans still allow cancellation, but deduct an administration or cancellation fee, or keep part of the payments. How much of the money comes back varies widely.

Some places set limits. In New York, money in a revocable pre-need account, with any interest, must be repaid on demand at any time before the funeral is provided, and no administrative or other fee may be charged. California lets the buyer revoke a preneed trust before the services are provided, less a revocation fee that the law caps. Many other states leave more to the contract, and the FTC notes that some state laws give little protection. In the UK, once the FCA cancellation period ends, cancellation terms are set by the plan itself.

When a refund isn't possible

Some arrangements are designed not to be cancelled for cash:

• Irrevocable funeral trusts in the US, often set up so someone qualifies for Medicaid or SSI. In New York, neither the buyer nor their heirs are entitled to repayment of the money in an irrevocable trust.
• Funeral bonds in Australia, which Moneysmart says can only be used for a funeral and can't be withdrawn early.
• Plans where the funeral has already been requested or provided. In the UK, the FCA cancellation right doesn't apply at that point.

If you're moving

A move is one of the most common reasons to cancel, and a transfer is often better. Plans sold through larger groups can sometimes move to another branch or affiliated provider, keeping the original price. A single independent funeral home may not be able to transfer the plan. Ask about transfers before cancelling, and get the answer in writing.

How to cancel

The steps are broadly the same everywhere:

• Find the contract and any trust, fund or policy documents.
• Read the cancellation clause, including fees and how the refund is calculated.
• Put the request in writing to the plan provider, and copy the trustee or insurer if they're named on the paperwork.
• Keep a record of when you asked and what you were told.
• If the provider doesn't respond or you disagree with the refund, contact the regulator or consumer protection body where the plan was bought. For UK plans from an authorised provider, complaints can go to the Financial Ombudsman Service.

For large sums, a provider that has closed, or a dispute about who is entitled to the money, advice from a solicitor or lawyer may be worth getting. If the plan isn't cancelled but ends up costing less than was paid, that's a separate question, covered in do you get money back if a prepaid funeral costs less.

Whatever happens to the plan, the wishes behind it still matter. Some people write them down and keep their story on an online memorial page, so the family has both even if the paperwork changes.

How it works where you are

• In Australia: How do you cancel a prepaid funeral plan, and can you get a refund? covers Australian cooling-off rules, refunds after cancellation, instalments and transfers.

Things to Consider

• Read the cancellation clause before you sign. It's much easier to walk away from a plan with bad terms than to get out of one later.
• Check the instalment terms. If payments stop, some contracts cancel the plan and keep part of what was paid.
• Ask the trustee as well as the provider. Where money sits with an independent trustee, the trustee can often confirm the refund position directly.
• Cancelling can cost the price protection. Buying a new plan later means paying the prices of the day.
• Tell the executor. Whether the plan is kept, cancelled or transferred, the people who'll deal with the estate need to know. See what an executor does for how a funeral plan fits into their role.

Common Mistakes

• Assuming there's always a cooling-off period. Some places have one by law; others rely on the contract.
• Assuming a full refund after the cooling-off period. Fees and deductions are common, and some products can't be refunded at all.
• Cancelling when a transfer was possible. A transfer may keep the original price and avoid fees.
• Only contacting the funeral home. When the money is held by a trustee or insurer, they need to be involved.
• Cancelling an irrevocable Medicaid trust expecting cash back. In the US these trusts generally can't be refunded.