The Sun Life Direct ninth annual Total Cost of Dying Report 2012 was released last week. As well as looking at general trends in the cost of dying, this year's survey entitled “Death shouldn’t mean debt; responsibility, choice and selflessness” looked at what motivates people to plan and make decisions for their funeral.
The report shows that the average cost of dying has shrunk by 1.9% in annual terms to £7,114 in 2012. However, the basic cost of a funeral has again gone up, this year by 6.2% to £3,284.
Funeral costs continue to rise
Funeral costs have increased by an average of 7% per year since 2004, when Sun Life Direct started its annual investigation into people's end-of-life arrangements, fears and expectations. This equates to a total increase of 71% over the 7 year period.
Non-discretionary funeral costs rose by £193 to £3,284 in 2012, with 9.6% and 6.6% increases in burial and cremation costs, respectively, as well as a 5.3% rise in spending on funeral directors. Tim Morris, head of the Institute of Cemetery & Crematorium Management, pinned the sharp increase in burial expenses on the shortage of new burial plots and the lack of government action in revamping burial laws. He also pointed to the costs many crematoria have incurred to install filter equipment in order to comply with tougher environmental legislation, translating into higher cremation fees.
Despite rising costs and increasing funeral poverty, discretionary funeral costs, including expenses on death and funeral notices, headstones and flowers, increased by £59 to £1,923.
Meanwhile, probate and estate administration costs fell by £385 to make the average fee £1,907, which may be explained by intensifying competition in the legal services industry and the rising number of consumers shopping around to find the best provider.
What motivates people to plan and make decisions for their funeral?
Those who plan to cover funeral costs say they want financial products that are simple, secure, affordable and flexible. In terms of funding options, 34% of respondents earmark savings for their funeral, 31% choose an over-50 insurance plan, 24% take another type of insurance cover and 16% buy a pre-paid funeral plan.
Worryingly, the study revealed that 27% of respondents have not given any thought as to how they will pay for their funeral. This lack of planning can have serious consequences for families, as funeral poverty increases and the government payment scheme designed to help the most vulnerable with funeral costs struggles to meet mounting demand. The survey also found that the majority of people who struggle to pay their funeral costs take on debt to meet the expenses, including borrowing money from banks or relatives or using credit cards.
Simon Cox, Head of Life Planning for Sun Life Direct, said “The industry needs to ensure that suitable options are available for people to take financial responsibility for their own funerals. ‘Debt’, ‘despair’ and ‘distress’ are common hallmarks of arranging a funeral and there is no light at the end of the tunnel to suggest that funerals will become more affordable.“
Dr Kate Woodthorpe, lecturer in Sociology at the University of Bath, concludes: “There is still a sense in some quarters that one’s death is someone else’s problem. As a forward-thinking nation we must encourage and help people to take responsibility for their own circumstances... The number of deaths each year is expected to rise by 17 per cent over the next 15 years and the issue of funeral affordability deserves urgent attention if we are to give our loved-ones the send-off they deserve.”
It appears that reform of the legal services market over the course of the year has gone some way to driving down prices for probate and estate administration, whilst many families are still struggling to afford rising funeral costs.