Change 18. Inclusion of universal funeral grant in compulsory insurance.
- All people when they die need a funeral. This need is now met for most, though not quite all, people in Britain by voluntary industrial insurance, but at an excessive expense—certainly in administration, probably also in actual expenditure.Substantial sums are distributed as death benefit byFriendly Societies other than collecting societies and Trade Unions, and some of these benefits are used for funeral expenses, but for the great majority of people provision for funeral expenses is undertaken through the Industrial Life Offices, whose work is described briefly in paras. 182-189 and more fully in Appendix D. The cost ratio of all the Industrial Life Offices taken together (including profits and tax) in 1937-40 was 37-2 per cent, of the premiums, nearly 7/6 in the £.
158. As compared with this, the cost of administering a funeral grant as part of social insurance would be negligible. On the contribution side, it would mean adding one or two pence to the value of the insurance stamp, which would have to be affixed in any case to the insurance document; on the benefit side it would mean paying one claim only for each person in respect of a fact of which there could be no doubt and which must be formally recorded by the State for other purposes. With this simple administrative task may be compared the work involved in unemployment insurance, in which on an average for every 100 insured persons 30 claims may be expected in every year. In each case there must be reference to a central register of contribution records and previous payments; a number of difficult questions as to the fact of unemployment, as to cause of unemployment, and as to the availability of the insured person for work, may have to be answered; in each case payment is a weekly one, spread probably over many weeks. Yet the administrative cost of unemployment insurance in 1939 was less than 10 per cent, of the contribution income. The administrative cost of contributory pensions in the same year was only 2 1/2 per cent, of the amount paid as pensions. (See Appendix E, paras. 27-30.) The administrative expenses of funeral grant in social insurance could not well be more than 2 or 3 per cent, of the contribution, that is to say, more than about 6d. in the £ of premiums in place of 7/6 in the £ under the present voluntary system. There can be no justification for requiring the public who need insurance for direct funeral expenses to pay the heavy tax involved in industrial assurance.
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The amount suggested for the funeral grant, namely, £20 for an adult with less for younger persons, is based on the following considerations. The cost of a funeral, as put to the Departmental Committee under Sir Benjamin Cohen in 1932 by the representative of the Undertakers Association, was for an adult £15 in London and £13 in industrial centres, with amounts ranging from £6 to £9 for children. These estimates, from their source, are not likely to be too low; they are about twice as much as the costs actually incurred by Local Authorities today in providing not “pauper funerals” but funerals as far as possible indistinguishable from those which relatives of the dead might provide. Taking these estimates, and adding a margin for cemetery fees, it seems reasonable to put the necessary expenses of decent funeral for an adult at the figure suggested, though if it appeared desirable there would be no difficulty in providing a larger grant as the contribution required is small. The weekly contribution required to secure a funeral grant of this amount is put in the Memorandum of the Government Actuary at about l-8d. per week for an adult man and 1-ld. per week for an adult woman during working years, to cover themselves and dependants.
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Some Regulation will be required to determine to whom in doubtful cases funeral grant for meeting expenses on a death should be paid, but in most cases there would be no doubt; the spouse, the parent, the child—would be the obvious recipient. It will be reasonable also to exclude from funeral grant persons who are above the age of 60 when the scheme begins, leaving them to be covered by existing policies. The grant will be a money grant, and will not involve standardisation of funerals, since individuals will be able to spend either more or less than the grant, according to their resources and desires with the undertaker of their choice. There are other problems of transition from the existing system, and there is the general problem, dealt with below in Change 23, of the treatment of industrial assurance as a whole, in the light of the proposal of this section and of Change 3 in regard to Approved Societies.