The cost of funerals is set to soar for the UK’s middle-aged. For people aged 50 today, its predicted costs could rise in 30 years time to as much as £25,000.
Not everyone plans their own funeral of course. Some die suddenly, others choose not to think about it. However there is increasing interest in pre-paid funeral plans. The basic idea behind these is you can pay for your funeral at today’s prices. In today’s low interest rate environment any savings you manage to put away, for whichever purpose, can easily be eroded by inflation. Undoubtedly too, people believe taking out a plan helps surviving relatives and friends. Not only will they not have to worry about organising your funeral at a distressing time, but they won’t be out of pocket either.
In 2013 experts say the average cost of a funeral is about £3k. But funeral costs are rising annually far faster than inflation at about 7%. It’s easy to see then that if we remain in a low interest rate environment funeral costs could spiral. You may say you don’t want a funeral, as such. But even the basics of getting cremated or buried will set you back four figures.
So what are these pre-paid plans? More than 100,000 are currently sold in the UK each year with about £2bn locked into plans. This represents nearly 800000 plans.
A funeral plan will let you organise and pay for your funeral at a price locked in today. Plans can be paid by instalment and there are plenty of different options available to let you personalise your funeral with typically, standard, mid-range and superior plans available. Depending on the plan you choose everything from the coffin, hearse and disbursements can be paid for.
For one reason or another funeral plans won’t suit everyone. There are other alternatives to avoid being stung by the cost of a funeral in the UK!. Over-50s life insurance plans pay out a lump sum on your death which can be used to cover funeral costs. You would still have to organise your funeral and it wouldn’t be pre-paid. The downside here is you can end up paying more in premiums than the final payout.