Money Matters
The cost of funerals is coming down, you may be surprised to learn. After decades of inflation-busting increases, a price war has broken out among undertakers.
Funeral directors used to rely on families automatically returning to them each time a member died, but they can no longer take this repeat business for granted. As the cost of funerals became ever more expensive, the bereaved started shopping around. This is now easy with internet searching and the arrival of funeral-price comparison websites. Funeral directors have had to respond by competing for priceconscious customers.
Co-op Funeralcare cut its prices a while ago. Then, earlier this year, one of the largest groups, Dignity, slashed the cost of its cheapest funerals by 25 per cent and froze the cost of full-service ceremonies.
Until then, annual price rises were relentless. Sun Life’s Cost of Dying Report 2017 shows a basic funeral last year cost £4,078, an annual increase of 4.7 per cent. Adding in the cost of the send-off and a professional to administer the estate brought the total bill to £8,905.
Undertakers also face competition from many new companies entering the market with cheaper, non-traditional funerals. Direct cremation is becoming popular for those who prefer to spend money on a farewell party rather than holding a funeral service.
Another development has divided opinion: hospices offering funeral services. The hospice pays fees for a franchise to become an undertaker. The first is St Margaret’s Hospice in Taunton, which introduced funerals earlier this year.
For hospices, it is a new way of raising money, though some worry that becoming commercial will affect their charitable reputation. Long-established funeral directors fear this creates unfair competition as bereaved families might feel dutybound to repay hospices by using their funeral services.
People planning ahead can look at pre-paid funeral plans. This fast-growing market is sold on the idea that you pay today’s price for your eventual funeral, so your family will have nothing more to fork out when you die. It does not work out like that.
Plans vary hugely so you need to check exactly what is included – most importantly, does it include the cremation or cemetery fees, or only the funeral director’s services?
Nor does all the money you hand over necessarily go towards your funeral costs – administration costs can be deducted first. Plans cost between £3,000 and £5,000. Your money might be put in a trust fund or invested in an insurance policy that pays out when you die, but it is not guaranteed to be safe.
Plan providers can be regulated by the Financial Conduct Authority, but it is not compulsory and most have chosen not to sign up.
Either way, there would be no compensation from the Financial Services Compensation Scheme if a provider failed, because these plans are not regarded as ‘designated investments’ under its rules.
The Funeral Planning Authority has a code of conduct for pre-paid plan-providers but, again, membership is voluntary.
If you are worried about leaving enough money to pay for your funeral, you could instead put money in a savings account jointly with whoever will be paying for your funeral.