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Counting the cost of funerals

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With the cost of funerals rising, do you know how you might pay for it when the time comes? asks financial writer Kara Gammell

Do you have plans in place for your funeral?No one likes to think about when and how we are going to die. What’s more, we certainly don’t like to think about how much it will cost – and one in five of us have no idea who would foot the bill. When it comes to death and dying, we like to bury our heads in the sand, but sadly, this could cost our families dearly.

Figures from the annual SunLife Cost of Dying Report 2016 show that even the most basic funeral – comprising funeral directors’ fees and disbursements, cremation or burial fee, doctor’s fees and clergy/officiate fees – costs £3,897. This represents an increase of 103% since 2004. 

What’s more, if funeral costs continue to rise at the same rate we have seen over the past 12 years, by 2021 a basic funeral will cost £4,779. 

According the survey, costs are escalating across the board. Funeral directors, for instance, charge an average of just over £2,400 for the coffin, organising and other advice. The fee for a cremation has risen to £733, while the cost of a burial is £1,950. 

In addition to the costs of the funeral iteslf, doctors charge an average of £164 to certify death, while a minister costs £148. On top of this is almost £2,000 for extras such as a headstone, hearse and catering for a wake, plus an average £2,929 to lawyers and others who will administer the departed’s estate. 

According to the research by Sun Life, of the 38% of people whose loved ones had made no financial provisions, one in seven said that finding the money to cover the cost of the funeral had caused them “notable financial concern”. 

Indeed, there has even been an increase in the numbers of people pledging their bodies to science to avoid the burden of funeral costs. 

But if you want to ensure that you don’t leave your loved ones dealing with a hefty bill, there are steps you can take to prepare financially. Here is how to get started.

Make your wishes known

Talking about your funeral isn't easy, but by planning ahead you will also make the financial, legal and practical consequences of illness and death much easier for your family to deal with.

Making effective plans well before they are needed is good, not just for our own piece of mind, but also helps make things easier for those we leave behind says Claire Henry, chief executive of Dying Matters, a coalition of organisations that aims to help people talk more openly about dying, death and bereavement..

“Losing someone we love is always horrible, but while we rightly focus on the emotional impact it is too easy to lose sight of the financial and practical impacts.”

Have you thought about whether you would prefer to be buried or cremated? Perhaps you would like to donate an organ or tissue to medical science?

Think about what kind of service you would like, and whether you want it to be more of a celebration of your life than a conventional ceremony. What hymns, readings or music would you like to have, and who would you like to be there? 

As well as making your wishes known in your Will, you could write this down and give it to someone whom you trust. Making sure your wishes are known is especially important if they are time-sensitive, like organ donation, as this needs to be carried out within 48 hours of death. 

One way to make your wishes known is by using an online tool such as My Perfect Send Off or Dying Matters’ own free and simple form, My Funeral Wishes, to set down what you want for your funeral.

Pre-paid funeral plan

If you’re keen to avoid leaving an unexpected bill for your family, you could consider a pre-paid funeral plan. With these plans – usually run by a firm of funeral directors – customers pay upfront to meet funeral expenses, protecting them against future price increases. 

The cost of cremation services included in such plans does not increase as you age; once the fixed amount is covered, there are no further payments to make. But as burial costs vary, the plan usually just contributes a given sum towards burial funerals (rising with inflation).Bear in mind once you hand over the money, you cannot withdraw it, should you need it at a later date.

It’s important to be aware of what a pre-paid funeral plan does – and doesn’t – cover. Many providers also offer different plans with differing levels of service. Check with your provider to see what is and isn’t included. 

Over 50s plan

Another way of paying for a funeral is with an over 50s plan. These are offered by several large insurance companies, and even some supermarkets’ own financial services arms. With this type of cover, a fixed lump sum is payable on your death, so long as you pay the monthly premiums. 

With no medical checks before you sign up, and a guaranteed pay out even if you die just a year or two later, these policies may sound appealing, but you really have to examine the small print. 

You must keep paying monthly premiums until you die, yet the lump sum it will pay out is fixed. So the longer you live, the more you pay, while the amount you're due to receive remains static. Do the maths carefully before going down this route.

Other ways to pay 

If you have not made any arrangements to pay for your funeral, whoever ends up footing the bill – family, friends or the council – can seek to recover the costs from your estate. However, it’s possible that there will not be funds available to cover this. If you die and leave secured debts, such as a mortgage, these will be paid before funeral costs.
 
If you do not have any funds to set aside for funeral costs, and the person arranging the funeral is on a low income and receiving certain benefits, they may qualify for a Funeral Payment from the government.

But while almost 40,000 families a year receive a Funeral Payments, two in five applications to this fund are turned down. Funeral Payments are capped at £700 and so are unlikely to cover the whole funeral bill. As such, depending on where you live, your family may have to pay up to a third of the cost of a simple funeral.

If your family gets a Funeral Payment, they will usually have to pay the government back from any money from your estate. Your family will have three months from the date of the funeral to make a claim. 

Visit Gov.uk for more information on eligibility and how to apply to claim this benefit. For those who live in Northern Ireland, visit NI Direct to apply for this benefit.

Retiresavvy is brought to you by Skipton Building Society. This article has been commissioned by retiresavvy and any opinions voiced are the author's own.

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