New report reveals millions of us haven't thought about the financial implications of our death on those we leave behind.
Only a third of us have enough savings to cover the cost of our death, a new surrvey has revealed.
According to the British Seniors Insurance Agency, a massive 23 million of us aren’t prepared for the financial implications of dying, including funeral costs and the cost of dealing with our estates.
One in ten people admitted that they assumed their friends or relatives would foot the bill for their funeral and 19% said they have no idea how their funeral would be paid for.
The average cost of dying is now a massive £8,126, according to Sunlife’s Cost of Dying report, making it the fourth biggest expense of your life (or death) after a house, wedding and car.
“Our research reveals the worrying scale of just how many UK adults are failing to get their financial affairs in order and put provisions in place for their death,” says Dave Sutherland, managing director of Neilson Financial Services, the firm behind the British Seniors Insurance Agency.
Impact on loved ones
As a result of our lack of forward planning, many people are leaving their friends and family with a hefty burden when they die.
Research found that 42% of people who have had to manage the financial affairs of a loved one said it added to their grief and 58% said it had a direct effect on their emotional wellbeing.
Having to step in and manage the finances of a deceased friend or family member has a particularly bad effect on 18-34 year olds, with 59% saying it added to their grief and 62% saying their emotional wellbeing was affected.
“The cost of overlooking these matters is clear, with the family members and loved ones left behind put under a tremendous amount of pressure,” says Sutherland.
“At what is already a difficult time many people are finding that their grief is greatly exacerbated by the fact that they have to cover the costs associated with a death. These strains are clearly evident in the numbers of people who say that they have suffered from stress or loss of sleep.”
The cost of dying
The cost of dying is just over £8,000 according to the latest research.
But where does that money go? More than £3,500 goes on the funeral itself according to the research, covering things like the burial or cremation fee, fees for the funeral directors, doctors and ministers.
Estate admin (hiring a solicitor for example) is the next biggest cost at almost £2,500, followed by the send off at a whopping £2,000. This covers everything from catering and the wake to special requests the deceased may have had about their final goodbye.
Paying for your death
It isn’t enough to have the savings set aside to cover your funeral and other costs associated with your death. When you die your assets and banks accounts are frozen until your executors have sorted out your estate. This can take weeks and means your own money can’t be accessed to pay for your final send-off.
You can get around this by keeping the money in a joint account, so the other account holder can access it, but they may not be able to withdraw the entire balance of the account.
A better option may be a life insurance policy. Many of these include a provision for funeral costs and will pay out a lump sum swiftly to cover the costs.
Alternatively, you could buy a funeral plan. This allows you to plan and pre-pay for your funeral.
There are two big advantages to this.
Firstly, you take the burden away from friends and family. Secondly, you get to lock in a funeral at today’s prices avoiding future increases.
But just make sure you understand what you are paying for as some plans don’t include the cost of burial and many don’t include cars for mourners or flowers.
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