How to pay for your own funeral
Paying for your own funeral is not the sort of spending any of us look forward to, but it’s something we all have to consider later in life. Funeral costs are not getting any cheaper and prices can vary substantially depending on where you live in the UK, and whether you opt for a burial or cremation. Average UK funeral costs have risen from £2,971 in 2011 to £4,163 in 20201. If prices keep rising at the rate they did between 2011 and 2020, the average funeral could cost £5,833 by 20292. With these eye-rising costs in mind, how can you finance your own funeral? We'll take a look at how prepaid funeral plans work and what the alternatives are.
Short of having perhaps money set aside in savings for funeral costs, most people paying for a funeral will need to find the money from somewhere. Here are some of your options:
- Take out a prepaid funeral plan
- Get over 50s life insurance towards funeral costs
- Agree a plan with a funeral director
- Use existing assets (your estate)
- Draw upon cash reserves.
The short answer is yes – you can pay for a funeral in advance through a prepaid funeral plan. These are an option for those who wish to pay for a funeral in advance at today’s prices. If you're considering one, ensure you read the information thoroughly as not all UK funeral plans are the same.
As the name suggests, a prepaid funeral plan is an arrangement that lets you pay in advance for a funeral. The amount you pay will be based on the price quoted at the time you take out the plan.
A prepaid funeral plan will usually cover the essential costs of a funeral director, including the coffin, care of the body, cars and pall-bearers, plus either the cost of cremation or a burial, depending on your preference. It’s unlikely to cover other costs such as a wake, floral tributes or a headstone. Paying for a funeral in advance may tie you to a particular Funeral Director or funeral company, which may become difficult if you move in the intervening years. Also, what’s offered can vary a great deal, so make sure to check that everything you want is covered on any plan you take out.
Once you’ve paid the agreed amount in your funeral payment plan, the parts of the funeral included in the plan are covered when you die. The provider will pay the money straight to the Funeral Director, so your friends or family won't have to get too involved in the financial or administrative side. It's also worth knowing you won’t pay Inheritance Tax on your UK funeral plan.
From 29 July 2022, the Financial Conduct Authority will be regulating the Funeral Plans sector. This will provide customers with enhanced protection if they take out a prepaid funeral plan from an FCA authorised provider. Read more information on the FCA Regulation of Pre-Paid Funeral Plans.
Some say it’s smart to prepay for a funeral, while others are happy to stump up the cash through their estate when the time comes. Either way, funerals can be expensive, so it pays to plan ahead and think about how your funeral will be paid for.
Paying for your own funeral may be a significant expense for you to think about covering, especially if you have a more elaborate service in mind or the costs include paying for a burial plot. It's worth trying to estimate what the likely costs will be, and then looking into ways you can begin putting plans in place to help pay them.
As a rough estimate, a one-off funeral plan payment could cost you up to £5,000, but you could potentially get a more basic plan for under £3,000. People understandably want to know how much a prepaid funeral costs, but in reality, it depends on the size and scale of your funeral and if you’d like to pay a lump sum or monthly instalments – paying monthly could increase the overall cost.
How to get a prepaid funeral plan
If you decide that a prepaid funeral plan is right for you, here are some points to consider to help you decide how best to plan for your funeral. If you need help deciding, please seek professional advice.
- Assess your finances. Could you cover the cost through your estate instead? How much would you need to pay for a prepaid funeral versus the alternatives?
- Use a comparison site. It’s worth doing your homework online to review the different pros and cons of each funeral plan.
- Decide on the payment structure. Do you want to pay in a lump sum or in instalments?
- Review the Terms and Conditions. It’s important to understand you know what the prepaid funeral plan entails, and what it covers (and doesn’t cover).
- Inform your family. You should make sure your nearest and dearest are aware of how to make a prepaid funeral plan claim.
1. Use your assets
If you’re lucky, you’ll have enough money in your estate to cover your funeral costs. If you'd like this money to be used in this way, you should ring-fence it, leaving clear instructions with family members or a solicitor. Remember that if funeral costs continue to rise faster than savings grow, it may be necessary to review and increase the amount set aside. If you feel you need more information, you should seek professional advice.
Not everyone likes the idea of saving up for an event they won’t get to witness, but if you do decide to pay for your own funeral using assets, here are some of the potential advantages:
- You can access your funeral funds in advance of the event.
- You can plan your funeral payments carefully based on your finances, rather than a rushed decision.
- Your loved ones won’t have to think about funeral costs when they’re grieving.
No one expects paying for your own funeral to be fun, but whichever option you choose - from using your own estate to taking out a prepaid funeral plan - you can enjoy the peace of mind that comes from knowing that you’ll have helped your loved ones by making things easier for them at a difficult time.
1. Independent research by Matter Communications on behalf of Dignity in 2020.
2. 2020 - 2029: Forecast based on average annual compounded growth rate of 3.82% each year between 2011 and 2020.