Funeral costs push thousands into debt

Bereaved individuals in the UK have an average of £1,305 each in funeral debt.

More than 100,000 UK adults are in debt as a result of paying for a funeral.

The annual Royal London Funeral Cost Index found that the average funeral now costs £3,551. And that significant cost has put 109,000 people in debt to the tune of £142 million - an average of £1,305 each.  

People are struggling with costs, but are showing a British stiff-upper-lip resilience when it comes to covering them.

35% used their savings to help pay for funerals, 28% borrowed money from friends and family and 20% get in to debt by using a credit card or loan. Some people even sell their possessions to meet costs.

Only 11% chose a cheaper funeral to minimise costs.

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Worrying fees

Funeral prices are rising all the time. The average cremation comes in at £3,163. That's £654 for the cremation itself, £160 for the doctor, £125 for the minister and £2,224 for the funeral director. Burials are a bit more expensive at £3,933: £1,584 for the burial, £125 for the minister and £2,224 for the funeral director.

Postcode lottery

Like many things, funeral costs are a bit of a postcode lottery, ranging from £2,859 for a cremation in Belfast to £6,899 for a burial in Beckenham, Kent.

Here are the top 10 most expensive funeral locations: 

Source: Royal London

And the 10 least expensive:

​Source: Royal London

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Other key findings

The rising cost of funerals isn’t the only thing that Royal London’s research discovered. Out of 1,988 people who have arranged a funeral in the past five years:

• 22% said that their deceased loved ones left no financial provision for their funeral
   
• 37% said they wouldn’t mind a Public Health Funeral if it meant that their family could avoid debt
   
• 55% agree that there is not enough financial support available for the bereaved

Shortage of burial space is also a concern for the Institute of Cemetery and Crematorium Management (ICCM), burial authorities and the general public.

The ICCM says that the only sustainable option is for Governments in Scotland, England and Wales to introduce legislation that permits the reuse of old, abandoned graves.

It says that The Social Fund Funeral Payment system is in urgent need of a review. 

The Social Fund Funeral Payment scheme is the UK’s funeral state safety net. The Fund has a cap of £700 to meet funeral expenses and is available if you’re on a low income or receive benefits. Bear in mind that you can only claim if you are arranging a funeral for a partner, child, close relative or close friend.

Ideally, the ICCM says that the Fund should be index-linked to inflation and adjusted to reflect current living costs in the UK.

Other ways to reduce your funeral costs

A funeral plan is appealing as it is exempt from your estate for Inheritance Tax purposes and is fixed at today’s prices. The main risk you run with this type of plan is that the funeral may end up costing less in total than the amount that’s been paid in over the years. Some plans do increase payment in line with inflation. However, if this is the case your premiums will rise too.

Over 50s plans can also have this issue. They are often aimed at people who are in less than perfect health and involve no medical check. If you’re in good health, you’re probably better off using your savings to put towards a funeral.

You might also consider life insurance. With a policy, dependents such as children or relatives that you care for can be fnancially protected as well as someone you may be in a joint mortgage agreement with, for example.

For people on low incomes, there is also the Bereavement Allowance and the Widowed Parent’s Allowance which are both means tested. With the introduction of the benefits cap, claiming could affect how much you receive from other payments such as Income Support or Pension Credit.

If a spouse or civil partner dies you could be entitled to a Bereavement Payment. You’ll receive a £2,000 lump sum, providing that your partner paid National Insurance and you’re under state pension when they die.

Alternatively, you could ask your family and friends for some financial assistance to take a bit of weight off. On the plus side, it means you would have some say in your funeral.

If you are thinking about taking out a life insurance policy, then you can easily find out the potential costs and cover involved using Lovemoney.com's life insurance store. Get a free, no-commitment life insurance quote today >

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