A Guide to Funeral Cover

Life can be expensive, and according to SunLife's annual Cost of Dying Report, so can dying - which cost on average £9,204 in 2018. Of this cost, the funeral is largest expense, with costs averaging £4,271, or £4,798 for a basic funeral and £3,744 for a basic burial.

Of course, you won't be around to pay the piper, but your family will and it can be a daunting expense, especially as they handle the other administration of death and cope with grief.

A popular way to offset these expenses is to take out funeral cover, an insurance policy that can meet the costs of your final send-off, delivering your family a lump sum payout on your death. There are several options for 'funeral cover': you can ensure your life insurance policy has sufficient funds for your funeral, take out a specialist whole of life assurance policy for over 50s with the intention of using the payout for your funeral, or purchase a separate pre-paid funeral plan, often linked with an insurance policy. We'll take a closer look at each option, including the advantages and costs, and ultimately how well they can ease your survivors' financial concerns and help you go out in style.

Funeral Costs

The staggering cost of the typical funeral might have you contemplating a burial at sea. But what exactly is pushing that final, morbid bill into the several thousand pounds? Before we consider how you can prepare for the expense of your funeral, let's take a closer look at the receipts:

• funeral directors' fees - £2,595: This covers the collection and care of the deceased, the coffin, the hearse, and the professional guidance and expertise of the funeral director.
• doctors' fees - £164: fee for a doctor to certify the death (this fee was abolished in Scotland in 2016)
• clergy or officiate fees - £159: fee for the performance of any funeral or memorial ceremony, whether religious or secular
• cremation fees: 77.05% of all deceased are cremated in the UK, up from just over a third in 1960. Some of the increased popularity of cremation is down to the comparative affordability of cremation as opposed to burial: the typical cremation cost just £832 in 2018.
• burial costs: The typical burial costs £2,174 in 2018, although costs vary dramatically regionally. In London, where people are packed cheap by jowl even in death and land (even when it's a funeral plot)is at a premium, the average funeral with a burial cost £7,538. In Northern Ireland, however, it cost just £3,240.
• memorial - £824: This encompasses all the additional costs of celebrating your life from the catering to the limo hire to the flowers to the catering.

Trends in Funeral Expenses

Funeral costs have risen precipitously in recent years, up 4.7% in a single year to 2018 and up 122.5% over the last 15 years. Most of this increase has been in the inflation of costs of burial and cremation. When queried, funeral directors attributed the increase in cremation costs (up 5.1% in a year) to cuts to local government services, hikes in fuel prices, and the imposition of mercury abatement emission targets (tooth fillings release mercury when burned).

Meanwhile, burial costs, up 5.6% between 2017 and 2018, were nudged up by lack of burial plots and local authority budget cuts.

You can save money by opting for a direct cremation - a private, no-frills cremation with no associated funeral service or viewing, sparing you all costs except the actual cremation and doctor's fees. A direct cremation doesn't just have to be about penny-pinching: some people see it as the simplest and most dignified way to exit this plane of existence. In fact, David Bowie, ever the trend-setter, choose one and he wasn't hurting for cash.

But while around half (47%) of Britons were aware of direct cremation, just 2% of the funerals arranged in 2018 were direct cremations. Despite the hefty costs of proper funerals, most people still wanted a service for their family and friends to celebrate their life.

Options for Funeral Cover

Luckily, there are insurance products you can take out and pay for in life to help you family manage these costs after your death. In fact, 62% of Britons have made specific provision for their funeral expenses. Around half (48%) of these people were opting for some form of insurance product, while the rest relied on savings or investments.

Funeral cover as part of your life insurance (chosen by 17% of people who made provisions)

When you take out a life insurance policy, you might want to ensure the sum insured will cover your funeral. However, with a term-level insurance policy, it's likely you will die after the policy expires or, if it's a decreasing term policy, die when the payout isn't high enough to cover the significant expenses of a funeral. You may want to opt instead for a whole of life policy, also called assurance, which delivers a payout whenever you die - whether it's tomorrow or years after you've received your birthday message from the Queen. The premiums you'll pay on whole of life insurance will be higher than those on term level insurance.

2. Over-50s life insurance (chosen 16%)

Over 50s life insurance is a whole of life policy specialised for those over 50, who may not qualify for other life insurance policies. If you're over 50 and under 85, your acceptance is guaranteed and the payout fixed, no matter when you die. The sum insured on these policies is typically lower than it would be for other insurance products - often between £1,000 and £25,000. Thus over 50s policies are often specifically taken out for funeral and death expenses. Some over 50s policies will even include specific funeral benefits, often a few hundred pounds that are paid directly to a funeral director on your death.

3. Pre-paid funeral plan (chosen by 30%)

With a pre-paid funeral plan, you pay in advance for your funeral, either in a lump sum or monthly instalments paid to a funeral director or insurance provider. Your money is then invested, either in a trust fund or in an insurance plan, so it can be paid out when you die. Read the terms of any funeral plan carefully before committing however: some only payout to cover the most basic costs of a funeral, and may exclude the burial plot and the costs of the memorial, including catering and flowers. Additionally, If you're paying for the plan in monthly instalments and live for a long time, a funeral plan ultimately won't be good value for money: the amount you pay over the years can easily eclipse the final payout.