It might seem like the kind of macabre question that is best not asked and, depending on your age, the question might sound far too premature.
In either of these cases, though, just a little forethought and planning ahead might ensure that when you die you get the send-off you always wanted and that worries about the funeral arrangements – let alone the costs – you have already taken care of.
Have you made plans?
As our blog post from March this year highlighted, during the last 5 years, in the UK we have spent £4.8 billion on funerals - of which £1.6 billion of this has been borrowed. While those left behind borrowed money from family and friends in order to pay funeral costs, shockingly, 27% of people (1.2m) turned to payday loans, racking up a total of £576 million debt in order to send off a loved one.
With no funeral plans in place, those you leave behind face the almost certain prospect of funeral costs which have escalated considerably from today’s prices - as well as any formal input from you about just how your funeral might be conducted.
According to insurers Royal London, funeral cost increases continue to outstrip overall inflation. In a year of record low inflation for the UK, funeral costs have increased by 3.9%, compared to an annual inflation rate of 1.0%, as measured by the Retail Price Index (RPI). It also reports that last year, the average cost of a:
- funeral was £3,702 (up £140 from the year before)
- burial funeral was £4,110 (up from £3,962 in 2014)
- cremation funeral was £3,294 (up from £3,162 on the previous year)
Without any form of funeral plan in place, your loved ones could not only have the distress of coping with your death, but also with trying to find the money needed to pay for your funeral.
Even if your loved ones are entitled to financial support from the Government, this amount typically won’t cover all the costs associated with your funeral. What about monies from my estate?
If you are leaving money to named beneficiaries, the funds typically won’t be available in time for the funeral. This means that they will still have to find an alternative way to fund your funeral until your estate has been sorted out.
The alternative is to plan ahead. One option is by using prepaid funeral plans.
These offer you a way of making whatever arrangements you care to make for that final celebration of your life and, perhaps even more critically, to pay for those plans now, at today’s prices (therefore freezing them), rather than the costs that are more than likely to have escalated many years’ down the line.
The costs involved in arranging a funeral may mount up very quickly indeed and represent a considerable overall expense – Funeral Costs Help provides an item by item breakdown of some of the likely areas of expenditure. Funeral director’s fees, in particular, are likely to rise appreciably in coming years.
To get an idea of future funeral costs, scroll down to our Funeral Calculator here.
Over 50 life insurance
If you are working to a tighter budget and are perhaps unable to pay for all of your funeral arrangements in advance, there is still a way of planning ahead and to start saving now for when the time inevitably comes.
This alternative lies in over 50s life insurance – a specially formulated kind of life insurance which pays out an assured cash lump sum when you die. A cash lump sum that might be tailored just to meet the anticipated costs of your funeral or for some other purpose, such as leaving a legacy for your loved ones or helping them to manage any inheritance tax liabilities by creating an insurance-funded trust.
Your acceptance for such cover is guaranteed and requires no medical. You pay a fixed monthly premium – for the rest of your life, or very often until you reach a certain old age, such as say, 90.
There is a risk with such insurance policies that the effects of inflation effectively reduce the sum that is available to cover what have become the costs of the funeral you intended and there is a possibility that – if you live until well into old age – you might have paid more in premiums than the amount of benefits eventually paid out.
When considering either a prepaid funeral plan or an over 50 life insurance policy, you might want to reflect on the likely outcome if you had not planned ahead for this one certain event in all our lives.