The cost of funerals is increasing every year, with the Sun Life Cost of Dying Report 2014 indicating that you can fork out as much as £8,427 for your funeral this year!
We look at 5 types of financial options available for you to consider when considering your funeral payment options.
1. Prepaid Funeral Plan
With a prepaid funeral plan you can cover the cost of your funeral in advance so you can rest assured that your family won't be left facing the financial burden. You can make a one-off payment or agreed monthly payments towards your chosen funeral plan and all costs will be covered in time for you funeral.
Each funeral plan can be tailored to include features such as:
- Funeral directors fees
- Hearse hire
- Care, preparation and embalmed of the deceased
- Cremation fees**
*For prepaid burial funeral plan only.
**For prepaid cremation funeral plan only.
When you decide which funeral aspects you want to pay for in preparation it's important to ask whether there will be any additional costs at the time of your funeral, such as plot costs for burial which your loved ones could end up paying for.
Before you make a decision, shop around for funeral plans to find the best price and level of service offered for your budget.
The added benefit of a prepaid funeral plan is that the funds will not count towards your estate when you pass, so it is tax efficient to purchase one of these plans before you die.
2. Use Savings
If you want to offer financial support to your loved ones without tying them to a set funeral plan then saving up some cash is one solution.
If you have saved up for a pot of money to be used for your funeral then you could be facing one of two problems.
- If your personal savings, included within your assets, exceed £325,000 then you will be caught out by inheritance tax. To find out more about this deduction you can read our guide Inheritance Tax: The Basics.
- If you aren't affected by inheritance tax then there could still be a problem with accessing your funds. If your savings are deposit based and not investment linked then you should be able to access the funds needed for a funeral, pending a valid quote from the funeral director.
Only the quote amount can be withdrawn, with any remaining funds being released pending the closure of all of your savings.
You can use our saving account comparison table to find an account suitable for saving up for your funeral.
3. Life Insurance
If you have taken out a life insurance policy it will depend on how quickly your chosen executor deals with the claim after your death. The consensus is that it takes about two weeks to complete a claim, as long as there are absolutely no issues with the claim.
Issues can arise such as:
- Missing paperwork
- Wrong reports being generated
- Cause of death being excluded within the life insurance policy
Deciding who you want to deal with your estate when you set-up your life insurance policy will help the claims process. To compare life insurance policies you can use our comparison table.
4. Over 50s Life Insurance
If you have set-up an over 50s life insurance policy and have already lived passed the cooling off period, typically 1 year, then a person of your choosing will initiate a claim and retrieve the funds you have paid for.
These policies work by you choosing a set premium to pay, usually an amount you can easily afford, which then offers you a figure to claim on when you die.
The figure is calculated based on your monthly contributions, how old you are when you take out your policy and the greatest benefit to an over 50s life insurance policy compared to a standard life insurance policy is that there is no medical screening, so everyone is accepted.
The pay-out for over 50s life insurance policies are also quicker, usually within a week if all documents are presented on time. To compare over 50s life insurance policies you can use our comparison table.
5. Government Support
It is also possible to gain government support to help pay for your funeral. This is only available to those who are on certain types of benefits and have a particular type of relationship to the deceased.
You could get help to cover the costs of:
- Burial/cremation fees
- Travel to arrange or go the funeral
- Up to £700 for funeral expenses (e.g. funeral director's fees, coffin etc)
You can visit the GOV.UK website to find out more about the funeral payments procedure is, including eligibility.
To find out which costs are associated with planning a funeral you can read our guide "Can You Afford To Die? The True Cost of A Funeral".
If you still aren't sure what you need to cover when planning a funeral then use our useful guide "Funeral Planning: A Comprehensive Checklist" to offer you a helping hand.
If you are considering what to do with your finances before the thought of planning your funeral then our guide "How to Prepare Your Finances for Death" can offer you a guideline on what options are available.