Can You Afford to Die? Costs Rising by Over 10% a Year
Thousands of people across the UK still fail to plan adequately for the future. Nowhere is this more evident than when it comes to funeral planning. While the majority of people plan ahead for weddings, holidays and Christmas, far fewer plan for the inevitable.
According to the latest research*, the average cost of dying has risen by 10.6% over the past year to £8,427 – one of the biggest rises in history and many times the current rate of inflation. It is also worth noting that the cost of a funeral now accounts for less than half of the total cost of dying, coming it at an average of £3,590.
As the cost of dying accelerates, it is reported that as many as 1 in 7 people are getting into financial difficulty paying for a funeral. To help support these families, the Government introduced the Social Fund Funeral Payment. However, the average award represented just 37% of the cost of a simple funeral. The eligibility criteria are complex and the qualifying conditions are strict with 47% of applicants in 2012/13 being turned down for help.
For those thinking about ways to plan for the own funeral, there are a range of options to consider such as putting money away in a bank account, building society or using an investment policy. As an alternative to a simple savings or investment product, specialist funeral payment plans are now becoming increasingly popular.
The most compelling method for making specific provision for funeral expenses is often a ‘funeral plan’. This type of policy provides guarantees around funeral director costs as well as a contribution to third-party costs, including burial or cremation fees, flowers, hearse, coffin, transportation and the like. These policies also ensure that the policyholder is covered should costs rise in the future, as these expenses are fully covered, no matter what their price at the time of death. Finally, many people enjoy knowing that their funeral will be conducted the way they wish and like to specify key aspects of their send-off. Funeral plans allow you to do this and offer peace of mind that your loved ones will not face any additional expenses after you die.
As Benjamin Franklin famously said “In this world nothing can be said to be certain, except death and taxes”. We think that planning for the inevitable is sensible for most people; and with a range of great options to do so, now is probably as good as any to put a plan in place. It’s too easy to see funeral planning as something that can be put off and done another day. But one thing is certain – that one day, there won’t be another day – and when that day comes, it’s reassuring to have your funeral costs taken care of.
Some key facts about the cost of dying
- Funerals only account for around 43%* of the total cost of dying.
- By 2034, the average cost of a funeral is set to be around £13,000*.
- Estate administration costs (hiring a professional, such as a solicitor to help manage the affairs of a deceased loved one) have risen by 34%* in the past year and now account for more than a third of the overall cost.
- Over half (52%*) of people are now choosing to administer their loved one’s estate themselves, compared to just 39% in 2013.
- 14%* of people who have organised a funeral in the past four years admitted it caused them financial concern with the average shortfall standing at £2,371*. Of this group, 42%* dipped into savings or investments to help pay for the funeral, a quarter* borrowed money from friends or relatives and 22%* put extra debt on a credit card to deal with the sudden cash outflow.
- The national average cost of dying figures mask significant variations at a regional level, with the average cost in the London area now a staggering £10,498*. Meanwhile, the least expensive place to die is Northern Ireland where the average cost is £5,893*.
- Aggregate spending† on funerals in the UK could rise from £2.8bn in 2014 to £3.7bn by 2020.
- 109,000† people per year incurred funeral debt.
- 5m † UK families would not currently be able to afford to pay for a funeral at short notice unless the deceased had taken out financial provision.
* SunLife Cost of Dying Survey 2014 † International Longevity Centre UK, 2015