The cost of living crisis has focused many people’s minds on their money. Unexpected funeral costs can be a challenge for families already dealing with bereavement. Planning ahead is a great way to avoid upset, and save money for the long term.
How people pay
So, how do people pay for their funeral? According to the SunLife Cost of Dying report 2023, 69% of people in the UK made provisions specifically to pay for their own funeral. Of those who made provisions, the number of people relying on savings has dropped by nearly a fifth over the last two years. This number is now just slightly higher than the number using pre-paid funeral plans.
However, most people who made provisions for their funeral didn’t leave enough money to cover all of the cost. This can often mean families are left to cover the shortfall.
In 2022, one in five of the bereaved families surveyed by SunLife experienced ‘notable financial concerns’ when paying for a funeral. On average, they had to find almost £1,870 to cover costs.
To make up the shortfall, families used savings or investments, credit cards, and borrowing from friends or relatives. In some instances, bereaved families sold belongings to cover additional costs.
Savings gaps
For the first time in many years, interest rates have been rising. However, savers are still not seeing their money grow in line with the rate of borrowing or in line with inflation.
Since the first Cost of Dying report in 2004, costs have risen by 116%. It predicts the average cost of a basic funeral will rise from £3,953 in 2022 to over £5,000 in 2027.
A large part of the attraction of funeral plans is that the cost of the funeral director services included in your plan are fixed at today’s prices*. This means that you can help protect yourself and your family from potential rises in funeral costs in the future.
Insurance shortfalls
Another route often taken in the hopes of saving for a funeral is an over 50s life insurance policy. This will guarantee you a lump sum, which can go towards the cost of your funeral. However, the lump sum may not end up covering the full cost of your funeral.
As explained by Money Savings Expert’s Martin Lewis, this is because of inflation: “The amount you're going to get paid may seem decent when you take it out – but each year it's eroded by inflation. So what looks like a lot at the start risks becoming a sum that won't stretch far enough.”
Funeral plan flexibility
A funeral plan is a flexible way to pay for your funeral arrangements in advance, and to specify your wishes. Once your plan is paid for, you won’t have to pay anything more for the funeral director services included in your plan*.
It’s worth noting that this doesn’t include third party costs. Here at Golden Charter, all our plans come with an allowance for third party costs, and the value of this allowance may grow over time. However, there may be more to pay for these costs if they exceed the allowance in your plan at the time of the funeral.
The recent Cost of Dying report shows that more funerals are being paid for via funeral plans. Our pre-paid plans fix the cost of the included funeral director services at today's prices. Opting for a pre-paid funeral plan also allows you to compare options and choose one that suits your own preferences and budgets.
Substantiations
- Or after 12 consecutive payments and as long as your payments remain up to date if you choose the instalment payment option.
