Financing the costs of a funeral is something most families would rather not have to consider, let alone at the moment of deepest bereavement following a loss. Yet the question of how to pay for a funeral service — and whether you can afford it — is hard to avoid.
MPs this week debated the cost of funeral services, after a private member’s bill was put forward by Labour MP Emma Lewell-Buck. Her proposals sought to improve government support for the bereaved and stop people getting into debt to cover the expense.
Many find themselves in financial problems after borrowing from the likes of payday lenders to pay for funerals, Ms Lewell-Buck said.
According to research published this month by Royal London, the UK’s largest mutual life and pensions provider, “funeral poverty” — where people find themselves having to borrow for a funeral — afflicts almost 110,000 in the UK. The value of funeral debt is estimated at £142m.
So should I be worried about the costs of a funeral? What am I likely to pay?
Royal London’s figures show average funeral spending is £3,551. Notwithstanding variations between local areas, which can be significant, on average burials cost £770 more than cremations.
This seems expensive. Has the cost been going up?
It can prove especially costly for those who are less well-off. Royal London’s research revealed there is very little difference between the amount spent across the spectrum of household income levels, with the country’s lowest earners spending roughly the same as those who earn the most.
Funeral cost inflation has also been on the rise in recent years. Figures published this week by SunLife, part of insurer Axa, showed that the cost of a basic funeral — made up of directors’ costs, fees for a service and burial or cremation — have risen by 87 per cent over the past decade. This compares to official consumer price inflation of 30 per cent over this period.
What are the options for paying for funerals in advance?
To avoiding placing a financial burden on their grieving families, and often to ensure their wishes are carried out, many people choose to pay for their funeral themselves. The two main options are pre-paid funeral plans and funeral insurance. Both offer a hedge against the rising costs of funerals by fixing the cost or payout at the point of signing up.
Funeral plans are usually bought from funeral directors, such as Co-operative Funeralcare and Dignity, and define the details and cost of a funeral. They promise to beat inflation by charging current prices for a future service. Plans can be paid in a one-off advance payment or in instalments.
Funeral insurance policies, often known as “over-50s plans”, will pay out a fixed lump sum upon death, intended to cover fully funeral costs.
How should I decide between them?
Premiums on insurance products are typically cheaper but may be payable on a monthly basis for the rest of your life, so could result in overpayment if the policyholder lives longer than expected. They provide a lump sum to help with the cost of the service but the family is often left to organise the arrangements themselves, unlike a funeral plan.
The monthly payments will cover a sum insured; any extra costs, say for a particular burial plot, will need to be met by family members or an estate.
Under a funeral plan, customers select a funeral director choose, the type and price of service they want and make regular payments into a trust to cover the amount. The service can be funded either by single lump sum payment or in instalments over as much as 10 years.
Funeral plans can be highly customised — allowing people to specify the details of the service such as the music played — but the more bespoke the higher the likely cost.
The National Federation of Funeral Directors, one of three industry bodies, has set up a Fair Price Charter scheme for funeral directors: those carrying the logo are able to provide a cremation (including cremation fees, doctor’s and minister’s fees, hearse and bearers) for under £3,000.
Does the government help those who cannot afford a funeral service?
Yes, government help is available if people show they cannot afford to pay. Either the person arranging the funeral or their partner must be receiving one of several benefits such as income support or housing benefit to qualify.
The money — known as the Funeral Payment — is paid back to the government from the deceased person’s estate.