It is quite normal for us to save up for big important costs like weddings, holidays, or retirement. However, planning ahead for our funeral costs is often overlooked and something we tend to shy away from discussing with loved ones. There are several benefits to thinking ahead about the cost of your funeral. These include the advantage of knowing that you’ll have a beautiful send-off according to your wishes, as well as ensuring your loved ones won’t be burdened with the sudden cost of paying for your funeral when you die.  

We’ll be looking at these key topics around funeral costs: 

• How much funerals cost and what is the current “cost of dying” in the UK. 
• The benefits of getting a prepaid funeral plan. 
• What is funeral insurance and what does it cover? 
• Over-50s insurance. 
• Using your life insurance payout to pay for your funeral. 
• Paying for your funeral from your estate. 
• Using your savings to pay for your funeral. 
• How to claim government assistance to help with funeral costs. 

How much does a funeral cost in the UK?  

Funeral costs in the UK have been steadily rising over the years. A direct cremation - the most popular type of funeral in the UK - costs around £1,498. This is a cremation without a funeral service or ceremony. A direct burial costs around £1,657, while a basic funeral can cost up to £4,141 and a cremation with a funeral service costs around £3,795. Keep in mind that these numbers are for the most basic funerals and the cost will go up with every optional addition that you choose.  

As the “cost of dying” has risen to nearly £9,658, the importance of planning ahead for your funeral costs has never been greater. Keep reading to learn about the different ways you can pay for your funeral. The best time to start planning for your funeral is right now and The Farewell Guide is here to support you every step of the way. 

Ways to pay for your funeral 

Prepaid funeral plan 

More than 210,000 prepaid funeral plans are sold each year in the UK making them one of the most popular choices for people planning ahead for their funeral costs. When choosing a prepaid plan you decide what you would like to include in your funeral and pay for it either upfront or with a monthly payment plan.  

The benefits of a prepaid funeral plan: 

1. You can lock in the price. 
   When booking your prepaid plan you are locking in today’s price even though the cost of your funeral will be more expensive in the future. Funeral costs are going up about 4% annually which means purchasing a plan today will likely save you a lot of money down the line. Bear in mind that only funeral director’s fees will be guaranteed, not third party costs like the crematorium or transport.  

2. Your family won’t be burdened with the cost of your funeral. 
   Many families end up going into debt or taking a cut from their savings if their loved one didn’t have a prepaid plan, insurance, or enough funds in their estate to pay for a funeral. To make up for funeral costs your family may be forced to borrow money or sell valuable possessions and, in some cases, cut corners when organising your funeral.  

3. Prepaid plans are regulated by the FCA. 
   In 2022 prepaid funeral plans became regulated by the Financial Conduct Authority. Consumers are now better protected from unlawful activity from funeral plan providers including claiming compensation if the providers go bust. Consumers can now also complain to the Financial Ombudsman Service.  
    
   Furthermore, if you get a plan with a FCA authorised provider your money will be safe, and they will fulfil your funeral plan even if you die before paying all your instalments.  

4. You can choose how you’d like your funeral to be in advance. 
   Whether you would like a simple direct cremation or a burial with a funeral service and mourners present, the choice is yours!  

5. Flexible payment options. 
   When booking your prepaid plan, you can opt to pay the whole amount in a lump sum or in monthly instalments.  

Things to consider when choosing a prepaid funeral plan: 

1. They don’t cover all costs. 
   Prepaid plans often don’t include costs like council fees, a burial plot, headstone, flowers or catering. These additional costs will need to be paid out of pocket by your family.  

2. There may be restrictions. 
   Depending on the plan, there may be restrictions on when you can have your funeral service.  

3. You may end up paying more through a payment plan. 
   Going with a monthly payment plan may be easier on you financially, but keep in mind that the total cost may end up being more due to additional interest.  

4. Age limits may apply 
   Depending on the firm you go with, age limits may apply to your plan. Make sure you ask them what restrictions the plan may have before locking in.  

Funeral Insurance  

If you opt for funeral insurance, you will pay a monthly premium - just as you would for any other type of insurance - which will then be paid out as a lump sum when you die.  

Be aware that funeral insurance covers basics such as the cost of the burial or cremation, a coffin, the hearse or limousines for mourners to travel in, and bereavement counselling. Nowadays you can get flexible insurance plans that will cover extra costs like flowers, burial plot, headstone, catering and wake expenses, but these inclusions aren’t guaranteed so it’s best to confirm this with your provider. 

Over-50s Insurance  

Over-50s insurance is another type of insurance that pays out a lump sum to your family when you die. Some or all of this amount can be used to pay for your funeral. You pay a monthly premium, and unlike other forms of insurance, you do not need to undergo a medical screening.  
 
However, there is no stipulation to spend the money on your funeral and if you decide to cancel the insurance you won’t get any of the money you paid into it back.  

Life Insurance  

If you are opting for a regular life insurance policy, you have the option to set aside some of the money for funeral costs. Keep in mind that life insurance may only cover some of the expenses associated with your funeral, and the rest may be paid out of pocket.  

You also have the option to put your life insurance into a trust. The benefits of doing this are that the money will go directly to your beneficiaries, bypassing inheritance tax as well as the probate process. Make sure that you know the extra steps involved to setting up a trust, such as appointing trustees and paying solicitors’ fees if necessary.  

Pay For Your Funeral from Your Estate 

Many people pay for their funeral out of their estate. Some drawbacks to this could be waiting for the money to be released from the estate and going through the probate process, which could be lengthy and cumbersome. If there isn’t enough money in your estate to pay for a funeral, however, your family will have to pay for your funeral out of pocket.  

Use Your Savings 

If you are able to, you can pay for your funeral with money from your savings. However, there are a few things you’ll need to keep in mind if you choose to go this route.  
 
Funeral costs are rising every year which means that you won’t be protected against inflation and your funeral may end up costing quite a lot in the future.  
 
It may also be a difficult and lengthy process for your family or executor to gain access to your savings account after you die. The bank will freeze your account until the probate process is completed to ensure that all formalities like inheritance tax have been paid out. The bank may release funds directly to the funeral home if presented with a death certificate and itemised bill for the funeral.  

Assistance With Funeral Costs  

There is government assistance available to help pay for your funeral costs, if you or your partner qualify for certain benefits. This is called a Funeral Expenses Payment and it will pay for funeral basics like burial fees, cremation fees, transport to the funeral, the cost of moving the body within the UK (a distance of more than 50 miles), death certificates and other documents. You may also receive up to £1,000 for additional expenses like a coffin, flowers, or funeral director’s fees.  

Take your time to research and consider all the options for paying for your funeral we’ve listed in this article and go with the one best suited to you and your family’s needs. We understand that every individual has unique wishes when it comes to their funeral.  

Of the options listed above, prepaid funeral plans are the only plan that allows you to specify your wishes for your funeral. This makes organising a funeral less stressful for your loved ones and ensures that you have the send-off that you want, however simple or extravagant you may want it.  

The Farewell Guide’s Free Funeral Planning Tool helps people plan their funeral wishes in advance and find an authorised funeral director in a few easy steps. Create your funeral plan here. 

Here are some guides you may find helpful: 

What is a Prepaid Funeral Plan and How To Choose One

The Difference Between Prepaid Funerals and Funeral Insurance

How Do I Choose A Prepaid Funeral Provider?

How To Find a Loved Ones Prepaid Funeral Plan?  

Can I Take Out A Prepaid Funeral Plan If I Am Terminally Ill?