The regulation of the funeral plan market has had a ‘profound and ongoing impact’ not just for funeral plan providers, but also for adjacent sectors like Over 50’s insurance.
The Financial Conduct Authority (FCA) was tasked with regulating the funeral plan market back in 2020 and outlined how it planned to ‘raise standards’ in the industry in 2021, ahead of the regulation deadline in July 2022. Since then the market has gone through a period of re-establishment and development and plan sales have now recovered to near their 5-year sales average having reached c.185,000 sales in 2024, from a low of c.150,000 in 2023.
The data comes from a new report published by Funeral Solution Expert which looks at the current conditions in the funeral plan market which shows evidence of ‘market realignment’ says Funeral Solution Expert co-founder and director, Simon Cox.
“What’s…notable is the shift in product mix and potential crossover effects on the Pure Protection market. Direct cremation plans now account for over 60% of the funeral plan market, a clear signal of changing consumer preference. But perhaps more telling is the narrowing gap in sales between funeral plans and Over 50s life insurance —raising the realistic prospect that regulated funeral plans could soon overtake Over 50s plans in popularity.”
This is significant adds Cox. The FCA are currently undertaking a market study of pure protection insurance products to explore whether they provide good consumer outcomes; looking at the structure of commission; raising premiums to cover commissions to intermediaries; whether the products provide fair value; and whether the market supports innovation and growth. In 2023, around £4.85 billion was paid out in claims on individual policies to support people suffering from bereavement, illness, and injury.
“As the FCA intensifies scrutiny on life insurance products, particularly around misleading claims about average funeral costs, commissions, and product clarity, it is likely we’ll see growing regulatory and consumer pressure in the Over 50s life insurance sector.”
says Cox. He says consumers will vote with their feet when offered the choice between simple, guaranteed, low cost, regulated funeral plans without the fear of losing everything if they cancel years down the line against the traditional funeral plans and life policies that offer no such guarantees.
He adds there are already shifts in market dynamics, particularly with the arrival of Co-op entered who ‘entered the direct cremation space with a bang’ drawing attention away from traditional Over 50s life insurance and toward immediate, practical planning products. Their brand strength and trust, media budgets, and scale pose a challenge to existing funeral plan leaders like Pure Cremation—and indirectly, to life insurers who may be eyeing the same audience.
“The implications for legal and estate planning professionals are clear. Clients looking to secure their end-of-life arrangements may increasingly turn to funeral plans (including direct cremation) as a regulated, transparent, and practical solution. Advisers and will writers would do well to ensure clients understand the difference between a funeral plan (and the increasing variety of them) and a life insurance policy, particularly where funeral cost certainty, and ensuring funeral wishes are known, is a priority.”
“As regulation continues to shape this evolving landscape, we believe the next 12 months will be pivotal. The convergence of funeral planning and life insurance, driven by both market demand and FCA oversight, will open new opportunities—for providers and advisers alike.”
concludes Cox
A synopsis of the FSE Funeral Plan Market Report 2025 and option to purchase the report in full is here: https://funeralsolutionexpert.co.uk/blog/funeral-plan-market-2025
