Planning and paying for your own funeral

Esther Shaw / 01 October 2015 ( 25 January 2018 )

No one likes to think about their own death, but with funeral costs rising, it’s important to plan ahead.

Findings from Royal London reveal that the average cost of a basic funeral in the UK now stands at a huge £3,784. This is double the price of a decade ago.

Costs can go higher still once you add in extras, such as venue hire and catering costs. The same report estimated that these additional costs could push the bill up by a further £840.

With this in mind, it’s important to discuss your wishes with your loved ones – and to plan for the future.

We take a look at some of the different schemes and products available to help you fund your funeral.

Pre-payment plans

Rocketing funeral costs are prompting more and more people to consider pre-paying for their send-off.

Prepaid plans can be bought from a funeral plan provider or local funeral director.

Costs will depend on the package you choose, and tend to start from around £3,000 for a basic plan.

You usually have the option of making a one-off payment now, or paying in instalments (though it’s worth checking for additional fees for paying month-by- month).

Once you have paid for one of these plans, you get the peace of mind of knowing that you have locked in at today’s prices; this means your family won’t have to dig deep to cover the shortfall if prices rise.

With a prepaid plan, all the basic costs are covered, such as funeral director fees, coffin, hearse hire, and so on, and you can add personal touches, such as the music and readings you want as part of the service.

In addition, the prepaid plan provider will usually handle most of the arrangements.

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Tread carefully

But while all this may sound appealing, you do need to tread carefully, as plans can come with lots of exclusions.

This can mean your family is burdened with additional costs once you die.

Some policies do not, for example, cover third-party costs, such as the doctor’s fees (for writing the death certificate), church costs, minister’s fees, grave digging, and the burial plot fees.

If this is the case, these will also need to be paid by relatives at the time of the funeral.

Read our tips for reducing inheritance tax liability. 

Life insurance policies

One alternative to a pre-paid funeral plan is a life insurance policy, also known as an over-50s plan.

Generally speaking, policies will pay out a lump sum on death towards the cost of a send-off.

It is important to note that if you live for a long time, you could end up paying in more than the sum your loved ones will get when you die. However, all providers should inform you of when your policy's break-even point will occur when you take out the policy. 

Another disadvantage of life insurance is that your family may have to arrange the funeral, unless your provider offers a Funeral Benefit Option. In the event of a claim, money will be paid directly to a Funeral Director who will arrange the funeral according to the customer's wish list. 

In addition, you need to check whether the plan covers the full cost, as once again, there could be exclusions.

The key is to check the Ts and Cs to see exactly what cover is provided.

Build your own pot of savings

When it comes to funding your funeral, you also have the option of going it alone and putting aside money every month.

You could do this by opening a “best buy” regular saver account, and then paying in, say, £100 each month to build your own fund.

If you open the savings account under joint names with a family member, they can use the fund for your funeral when you die.

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Releasing funds from an estate

Banks are usually willing to consider requests to settle the funeral bill from a late customer’s account, provided funds are available. An invoice will usually need to be provided.

Some banks may also reimburse a bill that has already been paid if proof of payment can be provided.

Government help

Low-income families may be eligible for a Funeral Payment from the Government.

This money will help with general costs, such as a burial, cremation or plot purchase. A payment of up to £700 is also available to meet fees, including the coffin, flowers, and the cost of the funeral director.

The award depends on an individual’s circumstances, and is only available to those receiving certain benefits.

The Government also offers Bereavement Payments for spouses and civil partners who have paid National Insurance and who were under State pension age when they died. The payment is a £2,000 tax-free lump sum.

Tips to bring down the funeral costs

  • Don’t automatically accept the first funeral quote you get. Make sure you shop around to find the best deal you can.
  • As the burial plot can be one of the biggest expenses, it’s worth doing a little research to see if you can find a plot at a cheaper location.
  • Look into natural burial sites, in woodlands, as these can work out cheaper than a gravestone and plot in a cemetery.
  • Consider cutting back on ‘extras’, such as additional limo hire, flowers and catering. Consider, for example, printing your own service and sorting out your own wake, perhaps at the local pub.

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The opinions expressed are those of the author and are not held by Saga unless specifically stated.

The material is for general information only and does not constitute investment, tax, legal, medical or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Always obtain independent, professional advice for your own particular situation.