A concerning fifth of families experience financial worries when planning a funeral

You might have considered what you’d like to happen when you pass away as part of your long-term plan. Perhaps you’ve written a will or spoken to your loved ones about your funeral wishes. Yet, you may have overlooked the costs associated with dying, and it could place financial pressure on your family.

Indeed, a worrying report from SunLife found that 20% of families experience “notable financial concerns” when paying for a funeral.

Of those who are worried about money, a third use their savings or investments to cover the costs. However, a quarter have turned to credit cards and 14% borrowed money from a loan provider. Others turned to family or friends for financial support or even sold belongings to pay for a funeral.

Worrying about how they’ll pay for a funeral at an already difficult time could harm the wellbeing of your loved ones. So, while it can be difficult to think about, considering how much your funeral will cost and how to pay for it could take a weight off your family’s mind.

The average cost of dying is nearly £10,000 in 2024

According to the SunLife report, the average cost of dying is £9,658 in 2024 after a 5% increase when compared to a year earlier.

The cost of dying figure is calculated by considering the fees of administering an estate, a basic funeral service, and some extras, such as a wake and flowers. A basic funeral alone costs more than £4,000.

Many people recognise the potential burden the associated costs of a funeral could place on their loved ones. The report found that 7 in 10 people have made some provisions specifically to pay for their funeral. However, only 54% are putting enough aside to cover the total.

It’s not just financial hardship that could affect loved ones you leave behind either. Of family members who experienced notable financial difficulties, three-quarters said it affected their mental health.

Even those in a financially secure position might struggle to arrange a funeral. As well as dealing with grief, they may worry about making the “right” decisions and ensuring the service aligns with your wishes.

So, taking steps to set aside money for your funeral and write your wishes could ease the burden your loved ones feel. Here are four steps you may want to consider taking.

1. Plan your own funeral with a pre-paid option

Funeral directors may offer a way to plan and pay for your funeral during your lifetime. As well as handling the financial side of the funeral, a pre-paid funeral plan could mean you’re in control and that your family won’t need to make decisions.

The SunLife report found that 37% of people who made provisions for their funeral used a pre-paid funeral plan. However, you should note that pre-paid plans often won’t cover all the associated expenses. For example, the cost of a burial plot or headstone may be excluded. Make sure you understand what’s covered before you proceed.

2. Take out life insurance that will pay your family a lump sum

A life insurance policy would pay out a lump sum to a beneficiary when you pass away. This could be a useful way to ensure your loved ones have enough to cover the cost of a funeral.

The SunLife report found that a fifth of funerals that are paid for using provisions set aside by the deceased are done so through a life insurance payout.

You’ll need to pay premiums to maintain the cover. The cost of life insurance premiums will depend on a range of factors, including your age and health. If you don’t pay the premiums, the cover will lapse. It’s worth considering your life expectancy and how premiums may add up during your lifetime.

If your estate could be liable for Inheritance Tax (IHT), you may want to place a life insurance policy in trust. Otherwise, the payout could be considered part of your estate when calculating IHT.

Similarly, a further 23% of funeral provisions used an over-50s life insurance plan. You will usually need to be aged between 50 and 80 to take out an over-50s plan, which would pay out a lump sum to your family when you pass away. Again, you’d need to pay regular premiums to maintain the cover. However, unlike life insurance, you don’t usually need to answer medical questions.

3. Earmark assets to pay for your funeral

You could set aside assets for your family to use to cover funeral costs. As funerals typically happen within weeks of death, earmarking assets that are easy to access, such as cash savings, could be useful.

Funeral expenses can usually be paid from your estate after you pass away. For some expenses, it may be possible for a bank to release money directly to a funeral director if your loved ones provide them with a copy of the death certificate and funeral bill.

However, in some cases, your loved ones would have to wait until the probate process has been completed for the funds to become available. For complex estates, probate could take up to 12 months, so your family may still need to cover the expenses in the short term.

4. List your funeral wishes in your will

It’s not just bills that can make planning a funeral stressful. Your loved ones might also be unsure about your wishes and worry they’re not doing your memory justice.

You can use your will to set out your funeral wishes. For instance, you might state whether you’d prefer a burial or cremation, or list songs that you’d like played during the service. This wouldn’t be legally binding, but it could provide useful guidance to your loved ones.

Contact us to talk about your estate plan

A funeral plan is just one part of an effective estate plan. Depending on your circumstances, you might also want to consider how you’d like to distribute assets, minimise a potential Inheritance Tax bill, or pass on gifts during your lifetime.

Please contact us to talk about how we could offer guidance when you’re creating an estate plan.

Please note:

This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

Note that life insurance plans typically have no cash in value at any time and cover will cease at the end of the term. If premiums stop, then cover will lapse.

The Financial Conduct Authority does not regulate Inheritance Tax planning, wills, or trusts.

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