We need to talk about our funeral plans

Research from leading insurer Sunlife suggests that us Brits simply do not like talking about arranging or funding our funeral. 

You may ask why we even need to be discussing such uncomfortable topics?

The answer, rising funeral costs.

In fact, the cost of a UK funeral has increased every single year since 2004. That is a staggering 122% increase over 14 years.

Back in 2004, the average cost of a funeral was £1,920. However, fast forward to 2018, and the cost has risen to an alarming £4,271. (Source: Sunlife).

What’s more, these costs are predicted to continue rising at a rapid rate.

If we are unable to cover these sizeable expenses, the cost will most likely fall to your loved ones.

The most common and cost-effective way in which to cover these costs is to take out either a prepaid funeral plan or life insurance.

Depending on your personal circumstances you could secure cover from as little as £6 a month.

We can compare quotes from life insurance broker; Reassured.

The cost of dying verse other expenses

During the last decade, while funeral costs have risen over 70%, our wages have increased by a mere 20%.

To put this into greater perspective UK property prices have increased at just a third of the rate of funeral costs during this period.

When we have less disposable income, regular expenses, where the immediate benefit is not obvious, like life insurance premiums, tend to fall by the wayside.

But this could leave you and your loved ones financially exposed.

Regional differences in the UK

There is a noticeable regional divide in the average cost of a funeral here in the UK.

Unsurprisingly, London is the most expensive place to hold a funeral, (average cost £5,880).

This is an enormous 37.7% above the national average.

Northern Ireland enjoys the lowest average cost (£3,231), 24.4% below the national average.

Cremation or burial?

In 2018, 73% of deaths resulted in a cremation and 27% a burial.

This could be because cremations are significantly cheaper.

The average cost of a UK burial is now £4,798, whilst a cremation is £3,744.

Why have costs risen so much?

Research suggests the rise in funeral costs is down to multiple factors.

The most influential include:

  • Cuts to local authority funding
  • Wage rises
  • Increase in funeral directors’ costs
  • Increase in the cost of land
  • Shortage of new grave sites.

It is not just about funeral costs

The average total cost of dying is now a mind-boggling £9,204.

Therefore, it is clear the funeral aspect of your passing actually makes up less than half of the overall cost.

You need to consider all the associated costs, such as the wake, catering, venue hire, flowers and car hire, (average cost £2,061).

There is also the professional fees required to administer your estate and pay probate etc. (Average cost £2,872).

Most of us do not have easy access to nearly £10,000 to cover our passing, so it is important to provision for the future to ensure your family do not have to pick up the bill.

How do people currently pay for their funeral?

62% of the UK adults have made some financial provisions to cover their funeral costs.

Although, many of these (41%) have not provisioned sufficiently to meet all the associated expenses.

Here is a breakdown of how the UK currently cover their own funeral:

  • 50% from personal savings and investments
  • 30% from a prepaid funeral plan
  • 17% from life insurance pay out
  • 16% from a guaranteed over 50s plan.

The worrying statistic here being the remaining 38% who have no plan in place.

1 in 8 families claimed that ‘finding the money for the funeral caused financial problems’.

To cover a shortfall those surveyed had to resort a range of methods, including:

  • Borrowing money (21%)
  • Putting on a credit card (23%)
  • Taking out a loan (17%)
  • Selling personal belongings (16%).

Plan for the future

The purpose of this post is not to scare you, but merely to get you to think about provisioning for the future.

In life we never know when our time may come. Especially when we are young and it not something we give much thought to.

However, if you have dependants or financial responsibilities, such as children, spouse and/or a mortgage, having some form of cover is vital.

Taking out a life insurance policy or a funeral plan can ensure all of the above costs associated with your passing can be covered.

Whether that be clearing the mortgage, meeting future family living costs, providing an inheritance or covering funeral expenses.

This selfless investment ensures any financial burden is not passed on to your family and friends.

The young you are when arranging your cover, the cheaper it will be.

So, why not seize the day and get on with living life, save in the knowledge the future is taken care of.

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The data in this post is sourced from SunLife’s ‘Cost of Dying Report 2018’.