Ways to pay for a funeral
Different funeral plans cover different costs. Some plans will cover things such as burial fees, grave-digging charges or cremation costs as standard, while other plans offer basic coverage or tiered levels of cover.
Funeral plans usually offer the option to pay a lump sum upfront, or to spread the costs by making monthly payments.
When you die, your personal cash savings may be used to cover the cost of your funeral. However, cash savings may not be accessible until your executors have obtained probate. In complicated cases this can take up to a year.
If the cost of a funeral continues to increase at the current rate, interest on savings are unlikely to keep pace with costs.
Whole life cover
Whole life cover may be used to pay for funeral costs. When you sign up for whole life cover, you will be committing to making monthly payments for the rest of your life.
Bear in mind that if you live a long time, you may end up paying in more money than the actual amount your family will receive upon your death.
Over-50s life insurance plans promise a fixed lump sum when you die, which can be put toward funeral costs.
However, the payout amount is fixed, so you may end up paying more into the policy than your loved one eventually receives. Once money has been paid in, you can’t get it back, and there are usually fees involved if you want to cancel the plan early.
Term life insurance
Term life insurance policies run for a set period of time, and will pay out if you die during this term. If you don’t die, then the policy will finish on the date you agreed and you won’t get anything back.
Premiums can vary widely depending on which provider you go to and if you have any pre-existing medical conditions, this may be expensive.
If you are receiving benefits or are on a low income, you might be eligible for state support towards funeral costs.
The Social Fund Funeral Payment can help pay for burial and cremation fees and provide up to £700 for funeral expenses, such as the coffin and flowers.
However, the Funeral Payment is rarely given out before the funeral. This means that your family will have to pay for arrangements first and claim later.
Many claims for the Funeral Payment are declined by the Department for Work and Pensions. In 2010/11, there were 69,000 applications for a Funeral Payment, of which only 38,000 were successful. The average claim paid was £1,217, even though the cost of the average funeral at the time was around £3,000. Therefore, the Funeral Payment is unlikely to fully cover the cost of your funeral.
Crowdfunding gives mourners a chance to support the bereaved in a practical way by offering a donation to cover funeral expenses. However, crowdfunding may take too much time to provide funds in advance of a funeral.