Planning a funeral for you or your loved one

While it’s not something we like to think about, having funeral plans in place can help remove the worry of costs later on for both you and your loved ones

When you think of life’s big expenses, the main ones are pretty obvious – house, wedding, raising a family, car – but the other might surprise you: it’s funerals. The average cost of a funeral was £3,675 in 2016, according to Royal London’s National Funeral Cost Index Report. The basic cost of a funeral with a cremation was £3,214, while a funeral with a burial cost an average of £4,136.

The costs

While this is the average cost, what you will pay for a funeral fluctuates a great deal. If you or a loved one is lucky enough to live – and pass away – in Belfast, the funeral could be the cheapest in the UK, with an average cost of just £2,898.

If you want a funeral to be in London, you’ll pay considerably more. Kensal Green has the dubious title of the most expensive place for funerals in the country at an average £6,422, rising to almost £10,000 if you are paying for a burial.

But geographic fluctuations can be found on a much smaller scale than that – two funeral directors across the street from one another could be charging different prices. “Shopping around really can save you money when it comes to funerals,” says Louise Eaton-Terry, Proposition Lead at Royal London. “Don’t assume that your local funeral directors all charge the same, or offer the same level of service.”

If you are planning your own funeral, or helping a loved one with their arrangements, take the time to get an estimate of costs from at least two funeral directors. If you are concerned about the cost – bear in mind the £3,214 cited above only covers the basics, not extras such as flowers, a wake or death notices – then ask if they offer a ‘simple’ funeral to keep costs down.

If you’re arranging a funeral for a loved one, you may also be able to get help from the government. If you receive certain benefits, and meet set rules about your relationship to the person who has died, you can apply for a Social Fund Funeral Payment. It is unlikely to cover the entire cost of the funeral – the average pay out was £1,410 in 2015/16 – but it could help.

Planning ahead

The cost of funerals has been steadily increasing since the 1980s, with the increase far outstripping inflation at an annual average of 6.1%. So, if you are planning ahead, paying for your funeral now and locking in today’s prices could prove to be a very savvy investment.

“A pre-paid funeral plan is a good way to protect against future funeral cost increases, as you fix the cost at the time of purchase,” says Louise. “Many people don’t bother with pre-paid plans because they think their assets will cover the cost of their funeral. But, how accessible are those assets? Would your relatives be able to access the money needed quick enough to pay the funeral bills?”

The benefit of pre-pay plans is that they sit outside of your estate, so they aren’t subject to probate rules – or inheritance tax – and the money can be released immediately to pay the bills.

If you can’t afford to pay the cost of a funeral up-front, another option is to go for a pre-paid plan, but with the costs spread over a set period. The drawback is you may have to pay additional fees compared to paying everything at once.

Alternatively, you could take out an insurance policy that may cover the basic costs of your funeral, depending on the type of policy you take out. But make sure you understand exactly what is covered and how much of your funeral would be paid for. It is also important to understand that, as with all insurance policies, you could pay in far less than the cost of a funeral and get a pay-out – but, if you pay in for a long time, you could pay in more than you get back.

There are a number of different ways to fund a funeral, and you will need to compare the options, read the small print and work out which is the best option for you. But whatever plans you make, don’t forget to tell someone about them.

More information on funeral plans and insurance policies can be found here: https://www.moneyadviceservice.org.uk/en/articles/funeral-plans