Funeral costs increase for eighth consecutive yearCost of a funeral increases by 71% since 2004

15 September 2012

Wills and probate

Funeral costs have risen by a staggering 71% over the past eight years, according to a new report from a leading insurer. 

In the ninth annual Cost of Dying Report published by Sun Life Direct, the cost of a basic funeral has risen 6.2% from £3,091 last year to £3,284 this year and represents an increase of 71% since 2004. Within the costs of a basic funeral, the biggest increase comes from burials, up 9.9%, followed by cremations up 6.6% and funeral director costs up 5.3% from this time last year. 

The growth in funeral costs significantly outstrips inflation measured by the Retail Prices Index, which has increased by 3.5% over the same period. 

Fortunately its not all grim reading. The overall cost of dying is reported to have decreased by 1.9% from £7,248 in 2011 to £7,114 . This is attributed to a reduction in cost of estate administration to wind up the estate of the deceased. 

Social Fund Funeral Payment Scheme

According to Sun Life Direct, the Social Fund Funeral Payment Scheme set up by the government to help people on low incomes pay for a funeral, is struggling to meet increased demand.

The 'funeral funding gap' which is the difference between the average Social Fund Funeral Payment pay-out and the average cost of a funeral has increased to £2,043 in 2012. This situation is unlikely to improve if funeral costs continue to increase, tightened budgets from the current economic climate and with a increasing population and age at death. 

Funding a funeral

There are several types of products on the market that will pay out a lump sum on death or pay out for a funeral, though each of these options come with their own different risks attached. 

Over 50's plans and life insurance 

Which? recently uncovered taking out a life insurance plan instead of an over-50s plan could see you leaving more than 40% more to your loved ones when you die, for more information see our online news story life insurance beats over-50's plan payout

Funeral Plans

Funeral Plans allow you to organise and settle the bill for you own or partner's funeral, fixing some of the cost at today's prices to pay out when you or your partner dies. These plans are expensive costing between £2,500 for a basic plan up to almost £4,000 for a comprehensive plan. 

The best plans on the market guarantee to pay out for the full cost of a cremation, while only a handful guarantee a burial. Not all third party costs, known as 'disbursements', are fully guaranteed, so you should check with the plan provider what costs are fully covered as any short fall will have to be paid by your relatives. 

Action point: For more information see our guide to Funeral Plans.

Putting your money into savings

Putting your money into a best rate savings account is the simplest and safest option to save for a funeral. However, if funeral costs continue to increase as they have done in the past eight years, your savings may not keep up with funeral inflation, especially with the best savings rates currently at around 3% . 

If you choose to put money into a savings account, it could be worth opening one in joint names with a family member, so they can access money easily when you die. 

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