Funeral costs increase by 80% since 2004Average cost of dying rises to £7,622
04 September 2013
The overall cost of dying is up 7.1% from last year with more people struggling with increasing year-on-year costs.
Sun Life Direct's annual Cost of Dying report, published today, reveals the growth in funeral costs continues to significantly outstrip inflation.
The rising cost of funerals
The cost of a basic funeral has risen 5.3% since last year to £3,456 this year. That represents an increase of 80% since 2004.
The average cost of a burial is now £3,914, which is almost £1,000 more than the average cremation at £2,998.
Adding other discretionary costs, such as a headstone and flowers, pushes up the basic cost of a funeral to an average of £7,622, which is an increase of 7.1% on 2012.
The average cost of dying also shows a variation in price depending on where you live, with the highest average cost in the London area at £9,556 compared to Wales, the least expensive place to die, where the average cost stands at £6,096.
This year's increase in funeral costs is mainly due to the rise in disbursement fees, which are costs outside of the funeral directors control. The third party costs which relate to cremation and burial fees tend to be controlled by local authorities, with burial fees continuing to increase at a higher rate than cremation fees.
Social Fund Funeral Payment Scheme struggles to meet demand
Sun Life Direct's research shows the Social Fund Funeral Payment Scheme, set up by the government to help people on low incomes pay for a funeral, continues to struggle to meet increased demand.
Almost a fifth of people who organised a funeral in the past four years struggled, with the average shortfall rising from £1,246 to £1,277 year-on-year.
This situation is unlikely to improve if funeral costs continue to increase and budgets tighten due to the current economic climate.
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? last year uncovered that life insurance payouts can outstrip those from an over-50s plan by more than 40% when you die. For more information, see how life insurance payouts beat over-50s plans.
Funeral plans allow you to organise and settle the bill for your own or your 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 and going up to almost £4,000 for a comprehensive plan.
The best plans on the market guarantee to pay both the funeral directors costs and third party costs (disbursements) no matter how much these increase by in the future.
There are a few providers that will fully guarantee the cost of a cremation, however there are no funeral plans that fully guarantee a burial. You should check with the plan provider what costs will be fully guaranteed by the plan as any shortfall will have to be paid by your relatives.
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 achieving around 2% .
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.
How have you coped when arranging funeral plans for a loved one? Are you worried about how your family would cover the costs and do have a funeral plan in place to elevate this worry? Tell us your thoughts by contributing to the blog on Which? Conversation.