It might be a bit of a taboo subject, but if you don’t want to leave loved ones with a financial headache, you might want to start thinking about and talking about death.
New research from SunLife has shown that the cost of dying is skyrocketing, with funeral costs growing by 4.7% in a year, making them more then double what they were 15 years ago. And this is the 15th year funeral costs have increased too, with a basic funeral now totaling £4,271.
Is there a cheaper way?
You can cut costs in half by opting for a direct cremation. This is when you get cremated without a funeral service and your ashes are returned to your family.
The average cost of direct cremation is £1,712 – a drop of 6.7% from last year, £2,032 less than a standard cremation and £2,559 less than an average funeral.
However, just 2% of people are choosing direct cremations, despite 98% of people saying they don’t want a lavish funeral and 31% saying they want their funeral to be as cheap as possible.
Dean Lamble. CEO of SunLife, believes this might be due to a lack of awareness. “Almost half (47%) of those who had recently organised a cremation had not heard of a direct cremation,” he said. “However, once they knew what it was, 19% said they would have considered it for the deceased and 44% said they would consider a direct cremation for their own funeral.”
But people aren’t talking about their wishes
The cost of dying is arguably compounded by the fact that few of us are communicating our wishes to our loved ones. Only 1% of people claim to know all the funeral wishes of their family and those close to them and 18% said they didn’t know any funeral preferences at all.
This means that when the time comes, you could have a significantly more expensive funeral than you’d planned for (or a much cheaper one).
Dealing with the cost of death
To avoid leaving your loved ones with huge funeral bills, it’s important to communicate your wishes and, if you can, put money aside that can be used to cover the cost when the time comes.
Life insurance policies will also give the beneficiary (the person you name when setting up the policy) a lump sum that can pay for your funeral.
But it isn’t just funerals that can be a financial burden. If you die and have unpaid debts, there may be financial implications.
Upon your death, the value of your estate (including life insurance payments) will go towards paying for your funeral and paying off any outstanding debt. Your family may have to sell off your assets, such as your house, to cover the cost if the money isn’t there in your savings and life insurance.
However, if you have any joint debt, such as a mortgage with
your partner, they may be liable for your share of the debt too. That’s why to
ensure your loved ones don’t find themselves in financial difficulty, it’s
important to make sure you have adequate life cover and savings, as well as
ensuring you pay down as much debt as possible. Why not speak to a financial
advisor to get professional advice about covering the cost of death? And by
talking about death openly, you can help alleviate some of the financial upset
should the worst happen.