Should you pay for your own funeral

While you may be more concerned with the immediate rising cost of living affecting everything from your weekly shop to your energy bills, one cost that everyone will ultimately face has also risen in recent years.

Research from insurer Sun Life has revealed that the average cost of dying has risen by 3.8% since 2021, to £9,200.

Your funeral and the associated costs will represent significant expenses that your loved ones will have to pay when you’re no longer around. Despite this, COVER magazine reports that fewer than 1 in 5 over-50s have arranged for their funeral costs to be completely covered by a life insurance policy.

No one likes to think about death, but it’s important to plan for these costs otherwise your family could be left with a five-figure expense to meet when you pass.

Read on to find out more about the rising cost of dying, and how you can use protection to ensure all these costs are covered.

The rising cost of dying

In their 2023 Cost of Dying report, insurer Sun Life revealed that the average cost of dying in 2023 is £9,200 – up 3.8% since 2021.

The “cost of dying” represents the total cost of a funeral – including professional fees, the funeral service, and optional extras such as the party or wake.

Source: Sun Life

As well as the cost of a burial or cremation, there are several other significant costs included in the total cost of dying.

Professional fees

At £2,578, professional fees have gone up 10.9% since 2021, and they now make up 28% of the total cost of dying.

Send-off costs

Send-off costs are the added optional extras that can make a funeral more personal to the deceased and their loved ones. This will typically include things like the catering, memorial, wake, and flowers.

Send-off costs now stand at £2,669, up 7.4% on the previous year.

A survey reported by COVER magazine found that 3 in 4 people said certain funeral costs surprised them, with the most common surprising costs including flowers, headstones, the coffin, and catering.

When you pass, your loved ones will likely have to find a significant sum to pay for your funeral and associated expenses at a vulnerable time when they will be grieving your loss.

Consequently, additional stress in the form of having to find several thousand pounds to cover expenses could be detrimental to their wellbeing.

Despite this, just 17% of over-50s have arranged for their funeral costs to be completely covered by a life insurance policy.

2 in 5 don’t put enough aside to cover the whole cost of a funeral

Positively, 69% of people have made specific provisions to pay for their funeral before they pass away. However, only 59% have put enough aside to cover the whole cost of the funeral – down 4% since 2021.

In 2022, 1 in 5 (19%) families experienced notable financial concerns when paying for a funeral. On average, they had to find £1,870 to cover the overall costs – up £70 since 2021.

Most of them found the money by:

• Dipping into their savings and investments
• Borrowing from a friend or relative
• Using a credit card.

Meanwhile, 1 in 10 over-50s expect their loved ones to use proceeds from selling their house or assets from their estate after their passing to cover funeral costs.

Additionally, 1 in 5 (20%) of those who haven't made any financial provision for their funeral costs said they don't want to think about it, while 17% who are unsure how their funeral costs will be covered have no savings in place to pay for this.

Matthew Ellis from the firm who commissioned the research said that nearly one quarter (24%) of respondents were worried about the future for the younger generations of their family, “yet so few have a firm plan in place to ensure that this inevitable cost is covered.”

“They, understandably, don't want to think about their own mortality.  But, in doing so, it will push the worry onto their loved ones when that day comes," he added.

Life insurance can help you to meet funeral and associated costs

Your death is likely to be a stressful and traumatic time for your loved ones. So, failing to put the right provision in place for your funeral could create further worries at an already emotional time.

While many people choose to put some savings aside, one of the most prudent ways to ensure there is cash away to pay for funeral costs is to have the right life insurance.

Life insurance will pay out a tax-free lump sum on your death, ensuring that there is cash available to pay for your burial or cremation, and all the associated costs. It gives you the peace of mind that your loved ones have one less thing to worry about when you pass away.

There are three types of life insurance that could be suitable, depending on your specific needs.

1. Term life insurance

Term life insurance pays a specific amount if you pass away within the term of the policy. You can choose the amount of cover you would like, and the cost is determined by factors such as the amount of cover, your age, and your health.

As well as providing cash to cover your funeral expenses, term insurance could also provide useful financial support for your family, perhaps to repay your mortgage or replace your income.

Bear in mind that if you don’t die within the term of the policy, your cover will lapse. So, you need to be sure to choose the right term – if you die after your policy lapses your family could still face the problem of finding the money needed to pay for funeral costs.

2. An “over-50s life insurance” plan

Over-50s life insurance guarantees a cash payout for your loved ones when you die. You make an affordable payment each month that never rises and, when you die, your loved ones can use the money to cover funeral or associated costs.

One of the advantages of an over-50s plan is that there's no medical, and you can choose a monthly payment and payout that suits you. You’re also guaranteed a payout on death.

It’s worth remembering that, if you live to old age, the total amount of premiums you pay on your over-50s plan could exceed the payout.

If you are over 50 it’s worth considering all your protection options. Just because you are eligible for an over-50 plan because of your age doesn’t mean that this will be the best choice for you.

3. Whole of life insurance

Whole of life insurance is designed to pay out a lump sum on your death – whenever that may be. It can be a useful option as it ensures your loved ones will receive financial support on your death.

Bear in mind that the cost of this type of insurance is generally more expensive as it is guaranteed to pay out when you pass away.

Get in touch

If you want to ensure that your family can cover the costs involved when you pass away, putting the right protection in place can give you real peace of mind.

Sun Life found that just 18% of adults have an over-50s plan, while 19% have a different type of life insurance.

As life insurance experts, we can help you to find the right protection for your needs. We will search the market for you to find the best price for the cover you need, and help you through the underwriting process until your cover is in place.

If you want to ensure your funeral costs are provided for, get in touch with one of our experts today, or get a life insurance quote online in just a couple of minutes.