Funeral Costs and How to Reduce the Impact on Loved Ones

Funerals don’t come cheap and the cost has been rising, so it makes sense to consider how your final goodbye will be paid for. Here are the average costs of a funeral and how you can reduce the financial impact on your loved ones, when the time comes.

Holly Bennett Published on 15 October 2021.
Funeral Costs and How to Reduce the Impact on Loved Ones

Funerals aren’t getting any cheaper, with even the most basic send-off running to thousands of pounds.

As much as we don’t like to think about the inevitable, it makes sense to consider how your funeral will be paid for. It can bring some reassurance to know that you’ve eased the financial burden on your loved ones and put what’s important to you in writing.

If you leave money behind as part of your estate, this can be used for funeral costs, though a funeral usually happens ahead of the estate being distributed. Banks may release funds from the account of the person who has died early for this purpose if there is enough to cover it.

But taking care of the planning side of things, and the cost, can help reduce the impact on your loved ones and remove the guesswork for them at what will be a difficult time.

How much does a funeral cost?

The average cost of a basic funeral in the UK is £4,184, according to the SunLife (2021) Cost of Dying Report, the highest it has ever been. This includes burial or cremation fees, funeral director fees, doctor’s administration fees and the cost of a minister or celebrant for the service. But it doesn’t include other costs, such as a memorial or flowers.

The report shows that the total cost of dying can vary widely, depending on a few factors. Whether it’s a burial or cremation is important. However, the extras people choose, such as a memorial, flowers and a wake, play a huge part. These alone average at £2,532 and, when added to basic funeral costs, and the average cost of professional fees (£2,547) makes the average cost of dying £9,263.

Another important factor is the location of the funeral. According to the SunLife report, London is perhaps unsurprisingly the most expensive place in the UK to have a funeral, with a basic funeral averaging at £5,235, compared with £3,222 in Northern Ireland.

While your location can’t really be helped, a funeral doesn’t need to be expensive to be meaningful. There are choices you can make that will reduce the cost but still give your loved ones a memorable goodbye.

The cost of a cremation

A cremation usually costs less than a burial. The SunLife report suggests that the average cost of a basic cremation is £3,885, and £1,554 for a direct cremation. More than half of funerals in 2020 were cremations, with 14% of these direct cremations.

A direct cremation is a pared-down approach with no service and no mourners attending. The person who has died is taken straight to the crematorium and the ashes are kept for loved ones to pick up. Some people just want a fuss-free, affordable approach. Mourners can still have a gathering to celebrate a person’s life independently; it just isn’t part of the funeral.

The cost of a burial

In the SunLife survey, on average, a basic funeral with burial in the UK costs £5,033. This includes a fee for digging and preparing the burial plot and the cost of the plot itself. The type of burial ground and other choices will affect the cost of the burial. For example, a woodland burial with a wicker coffin is likely to cost less than a traditional burial with an oak coffin in a London borough cemetery. In 2020, just over a quarter of funerals were burials.

What makes up the cost of a funeral?

The cost of a funeral is determined by a few factors, but it’s usually made up of:

  • Professional fees and third-party costs, which include the cost of a burial plot or crematorium fees, funeral service costs, doctor’s fees for cremations (except in Scotland) and funeral director fees. Funeral director fees can make up more than half the total cost of a funeral.
  • Personalised extras, which might include a memorial, catering at a gathering, limousine hire, flowers and order of service cards.

As there is no industry standard for how costs are set out, read the details of a quote carefully, and consider getting at least a couple of quotes. The SunLife survey shows that as much as 81% of people did not get a quote at all, or only one quote, from a funeral director. Good funeral directors will be flexible, so if you don’t want certain services, say so.

When choosing a funeral director, make sure they are a member of the National Association of Funeral Directors or the National Society of Allied and Independent Funeral Directors. If you’re thinking of having an eco-friendly funeral, such as a woodland burial, you could look for a member of the Association of Green Funeral Directors. And don’t underestimate the value of asking people you know for recommendations, based on their experiences.

How can you plan to cover the cost of your own funeral?

Most of us make some kind of financial provision for our funeral. Here are a few ways you can do it.

A prepaid funeral plan

This is where you choose a funeral plan, which includes specific services, and pay for it up front or in instalments. A funeral plan protects you and your loved ones from price increases for a funeral service in the future. It also lets you choose the type of funeral you would prefer, down to the type of coffin.

But bear in mind that these plans won’t necessarily cover the whole funeral. So your family may have to make up the difference for flowers or the wake, or shortfalls for third-party services. A prepaid funeral plan also doesn’t generally cover the cost of a burial plot. Before you buy, be absolutely clear about what is and isn’t covered.

» MORE: Are prepaid funeral plans worth it?

An over-50s life insurance policy

If you take out over-50s life insurance, the guaranteed lump sum payout could be used by your family to go towards funeral costs. This type of insurance is whole-of-life cover for people aged 50 and over, so the payout is guaranteed whenever you pass away. This is provided you keep up the monthly payments until you reach the maximum age, usually 90, or until you die.

One possible downside is that if you are lucky enough to live a long life, you could end up paying in more than the lump sum pays out. Also consider that over-50s policies are not usually inflation protected, so the lump sum won’t buy as much in the future. If you choose a policy where the lump sum increases in line with inflation, so will your monthly repayments. There is also no certainty that the lump sum will cover the entire cost of your funeral.

Savings or paying for it from your estate

You may prefer to use a dedicated savings account or an ISA to build a savings pot for your funeral. Whether the interest rate will be in line with the rising cost of funerals is worth considering, but it could be a useful way to save towards your goal.

Like any other bank account, unless it’s a joint account, your family will need to show specific documents to the provider for it to release funds for a funeral before probate is granted.

Otherwise, you may prefer the bill to be paid for from your overall estate, if you think there will be enough to cover it. A funeral is usually treated as the first outstanding cost to pay by the executor of your estate after outstanding secured debts.

It’s worth knowing that, unlike a prepaid funeral plan, savings will be considered part of your estate and may be liable for inheritance tax.

Make your wishes known and easy to find

You can also state your funeral preferences, outside of the cost, in a few ways.

You can state that you would prefer a burial or cremation in your will, and use a letter of wishes to go into more detail. Perhaps you want to specify a humanist or religious ceremony, particular songs, or be interred under a tree, or for mourners to celebrate your life after the service in a

pub you love. Writing your wishes in your will doesn’t make them legally binding, but it can help direct your family and tell them what’s important to you.

A funeral usually takes place soon after someone dies, which may be before the will is found and read. So it’s important to talk about your funeral wishes and plans to your family, and if you have a prepaid funeral plan, to make them aware. You can also give your executors a copy of your will, to explain your wishes ahead of time.

» MORE: What to consider when making a will

How to reduce funeral costs

It stands to reason that a burial with a horse-drawn carriage and a wake with five-star catering will cost more than a direct cremation. But even if a funeral takes the middle ground, there are ways to cut costs.

You don’t have to use a funeral director, so one way to reduce costs would be to plan as much as you can of the funeral in advance yourself. However, a funeral director is likely to make life easier by taking care of the practicalities and coordinating services and suppliers. They also offer advice and support.

Other ways to cut costs might be:

  • choosing a cardboard coffin or a shroud
  • scattering ashes instead of internment, if it’s a cremation
  • picking a plot in an area where you live, if it’s a burial
  • not using limousines for mourners, or a hearse
  • forgoing flower tributes and asking for charity donations
  • having a home-based wake

While you may not want to break it down to such fine detail, it’s worth bearing in mind if you’re considering a prepaid funeral plan. Don’t assume you have to pick the most extensive package with add-ons, and make sure it doesn’t include anything that you don’t want or need, such as two limousines if you have a small family.

Paying for the services included in the plan ahead of time can protect you from the rising cost of services in the future. Some plans allow you to spread the payments over 25 years or more, but make sure you’re clear on how much you’ll be paying in total interest over that period.

How is a funeral paid for?

Although most of us make some kind of financial provision for our funeral, unfortunately it isn't always enough to cover the cost. This may be a simple case of underestimation, but it’s perhaps no coincidence that the cost of funerals and funeral director fees has been rising above the rate of inflation over the past 10 years.

In the SunLife survey, on average, families had to find nearly £1,800 to pay for a loved one’s funeral. This caused financial problems for 14% of families. Most had to use savings, credit cards or borrow from friends and family.

Getting help with funeral costs

If there isn’t enough money left behind to cover the cost of a funeral, there is help available.

The government’s Funeral Expenses Payment and the Funeral Support Payment in Scotland can help with the cost of a funeral if your family or friends don’t have the money and are on certain benefits. If there is enough money left in your estate, they will need to pay the money back.

The Funeral Expenses Payment won’t usually cover the cost of the whole funeral, such as burying ashes, but it will cover the basics, such as burial or cremation fees.

Eligibility and how much the person organising the funeral receives depends on a few factors, including whether there are funds available from the estate of the person who has died, or if a funeral plan left a shortfall.

» MORE: What to consider when creating an estate plan

Image Source: Getty Images

About the author:

Holly champions clear, jargon-free writing. She’s been creating finance content for leading organisations for over 10 years, with expertise in insurance, wills and probate, and all things health. Read more

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