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Tackling your debts

Funeral costs – are you prepared? Part 1

Posted 03 July 2015

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As funeral costs look set to rise to an average of £5,200 by 2020, how will you pay if a loved one dies?

We’ve got a question for you. If your loved one, partner or a close relative were to die, and you were expected to pay for the funeral, would you have the money to cover the cost? In fact, would you even know how much an average funeral costs these days?

If this is something you’ve not thought about before, it’s definitely worth spending some time on. Speak to your loved ones, as unpalatable as it may be, and find out what provisions they have in place to pay for these costs once they’re gone.  

If you don’t, you could be left worrying about how you’re going to pay the bill. And it could be a big bill. In fact, according to a recent article in The Scotsman, the average funeral costs for a simple funeral in 2014 were, £3,590, and is set to rise to £5,226 by 2020, with more elaborate funerals costing anything up to £7,000! That’s a lot of money to pay out in one go, especially if the death is unexpected.

Being Next of Kin

But the death of a close relative may not be only time you’re expected to pay for a funeral.  You may also find yourself being asked to deal with the funeral of a relative you’ve not seen for years, or may not have even met, simply because you are the only next of kin left or the only one who can be traced. 

(As you may be asked to pay for the funeral of someone who’s a relative, but not a person you’d consider to be a loved one, for the purposes of this article, we’ll refer to the person who’s died as ‘the deceased’.)

So, what can you do if you find yourself having to pay for a funeral unexpectedly?

Thankfully, there are a number of things you can check and, if you find there’s no provision for funeral costs to be taken care of in place, there are some places where you may be able to find financial help.

So to address the first point first, you should…

Check if the deceased had life insurance

These days, many people have a life insurance policy (some of which may be sold as “funeral insurance”). Some life insurance policies can be written in trust, which means that the money is put aside directly to benefit a certain person and isn’t paid into the estate. In this case, it should be relatively straightforward to receive a pay-out from the insurance company, which could help with the cost of the funeral.

 Does the deceased have a pre-paid funeral plan?

Next, you should see if the deceased had a pre-paid funeral plan in place. Some funeral directors offer funeral plans that can be paid into over a number of years. This usually involves choosing a pre-arranged funeral package, which can include just the basics, or the cover the whole thing – from coffins to paying for the wake.  

Is there any money in the deceased’s estate?

As long as any bank accounts are not joint, anything left in the deceased bank account can be used to pay for the funeral. You should approach their bank or building society and ask if the money can be released to the executor or administrator of the will. 

Are you able to borrow from family?

If you can, it’s probably better to approach family first if you need money to cover funeral costs. They’re less likely to add interest and more likely to be lenient when asking for you to pay it back. But do bear in mind that borrowing money from family can lead to other problems, so only consider this is you’re confident that it won’t cause an issue later on.

Could you get a Funeral Director loan?

If you think you might be able to pay monthly instalments to cover the costs of the funeral, you could find out if the local funeral director is able to offer you a loan. But, if you pay this back on a weekly or monthly basis, it will likely end up costing you more, as they’re sure to add interest to anything you borrow. So make sure you check the terms of the contract thoroughly before signing. 

 

This is the end of part one and we hope it’s been helpful. In part two we’ll have a look into funeral payments provided by the Government if the options above aren’t right for you. 

by Christine Walsh

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To find out more about managing your money and getting free debt advice, visit Money Advice Service, an independent service set up to help people manage their money.