As if meeting your maker was not enough bad news itself, it seems that the cost of dying has soared by more than seven times the rate of inflation in the last year.

Fuel poverty has often grabbed the headlines in recent times but funeral poverty is actually quite a big issue and if you haven’t made provisions to leave enough money for your burial by taking out life insurance, then it could well be that you can’t really afford to die.

Funeral funding shortfall

It is estimated that funeral poverty, which can be used to identify the total amount of money that the nation is short of in funeral provision funds, now stands at a staggering £200 million.

Based on the current annual increase in the average cost of a funeral, it will mean that you have to find at least £4,500 to cover all the costs involved with a burial, which is over £2,000 more than many people can afford or have budgeted for.

It seems that many people are having to dip into savings or even pay funeral costs using their credit card in order to make up the funding shortfall.

Getting state help

The Department of Work and Pensions (DWP) operate a Funeral payments system and it is there to provide financial support for families on low incomes so that they can meet the burial costs for their loved ones.

The fundamental problem that people are finding when using this system is that you have to make the payments first and then make a claim afterwards. That may seem acceptable, but when you consider that based on the last available public information, only 38,000 from a total of 69,000 applications were accepted for payment, a lot of people are in for a nasty financial shock.

In addition to the poor success rate for a successful application for funding, the average payout was around £1,200 which is well below the true cost of a funeral at today’s rising prices.

Public Health funeral

The other form of state help is commonly referred to in derogatory terms as the pauper’s burial, although it is officially termed as a Public Health funeral.

This happens when there is no one else that can be identified as responsible to pay the funeral costs so the local authority steps in and foots the entire bill. There is still a stigma attached to a funeral of this nature but with the Funeral Payments system failing so many people and being so complicated to apply for as well, there is now an increasing demand for a Public Health funeral as the default option.

Rising energy prices

There are a number of factors that are contributing to the rising cost of dying and one of the perhaps more bizarre increases is linked to energy prices.

Rising energy prices mean that it actually costs about 5% more than it did five years ago to cremate someone, so even in death, fuel prices can still come back to haunt your relatives even if you no longer have to worry about it.

Cremation or burial

Even allowing for the rise in energy prices causing cremation costs to increase, it is still estimated that a cremation is roughly £1,000 cheaper than a burial.

If you arrange a service before a burial or cremation, this is another area where costs seem to be spiralling upwards each and every year. Church of England fees for a standard church service used to be just over £10 in 2012 but that same option, will now cost you about £160 at the last count, which is a massive 60% increase.

Funeral directors

It seems that the fees charged by funeral directors has not risen as fast as some of the other components involved with a funeral but despite this slight respite, it seems that bad debt levels have risen for a number of major funeral companies.

The increase in bad-debt provisions where people have simply not paid, presumably through lack of funds rather than choice, has meant that the average charges for funeral costs quoted by funeral directors has actually risen, simply to allow for the rising levels of non-payment.

When you take into account all these figures and the upward trend of funeral costs, it seems that you may actually be better of considering either a pre-paid funeral arrangement so that you can cap the costs, or maybe consider taking out a funeral plan so you are not a financial burden after you have gone.

Jack Birch has extensive experience as a personal finance consultant. He specialises in health insurance issues and his articles mainly appear on senior money and health blogs.

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