How do consumers come up with the money to pay for funerals?



Yesterday we took a look at how funeral merchants should expect their clients to pay for the services that they select.  Our article took a look at crowdfunding, credit cards, savings, and, of course, preneed funding.  And, we concluded that as good as it is to get payment done and out of the way during the arrangement process, that is not always possible.


Today we will look at the other side of the coin — how do consumers fund funeral costs.  Specifically, how consumers who have not made provisions for funeral costs to be taken care of fund these expenditures.  Again, we will look to the recent Sun Life Cost of Dying Report from Great Britain for this information.  While this report comes from across the pond, I think you will agree with me that the methods of raising funds to pay for death care expenses for those who have not made provisions is somewhat universal.


Some of the good news from the recently published Sun Life Cost of Dying Report includes that the percentage of Brits who made provisions specifically to pay for their funeral expenses is up to 69% in 2022. . an increase of 3% over the number in 2021.  Of that 69%, 59% of those put away enough financial resources to cover the entire cost of the services.  41% of those that were prepared, however, did not put away an ample amount.


Of those that put away money to pay for a funeral at a later date did so by, in some combination, using the following financial instruments:

  • 41%  –  Savings and Investments
  • 39%  –  Prepaid funeral plan
  • 37%  –  Some type of other life insurance plan


Of those British families that either put nothing away ahead of time or found themselves with a shortfall for expenses, here is how they paid for services (in some cases using more than one option):

  • 33%  –  Took money from savings or investments
  • 27%  –  Put the balance on a credit card
  • 23%  –  Borrowed money from a friend or relative
  • 15%  –  Sold belongings
  • 14%  –  Borrowed money from a lending provider
  • 12%  –  Paid the funeral director in installments
  •   9%  –  Applied for a government subsidy
  •   6%  –  Other or can’t remember


Other Findings“In 2022, 19% of families experienced notable financial concerns when paying for a funeral. On average, they had to find £1,870 (US $2,302) to cover the overall costs – up £70 (US $ 86) since 2021.”


Funeral Director Daily take:  It’s somewhat the old line here in that there is “Good News” and there is “Bad News” in this report.  In my opinion the “Good News” is that the percentage of people making plans to pay for their funerals rising to 69% of the population is a good sign that people, more and more, are doing planning for this expense.


Tom Anderson
Funeral Director Daily

The “Bad News” is that 19% of deaths bring forward a financial crisis for survivors.  And, that financial crisis is no small number — $2,302 and apparently growing.  I’m pretty certain that if the death care industry cannot bring those numbers down, then we will be seeing, over time, consumers move to less costly services to do that on their own.


I’ve been a firm believer that preneed can be the great weapon in this battle if death care merchants can just get the story on preneed out to the general public.  I’ve said before that preneed is the “biggest win-win” in funeral service.  Funeral homes win because they know they are going to get paid and the consumer public wins because they have the ability to purchase the future services that they want while at the same time having a “peace of mind” that, whatever happens to their financial well-being as they age, money is in insurance or trust funds to carry out their disposition wishes.


Our firm, over time, moved our average target age for preneed clients from Social Security age of 65 down to age 55 and over.  As we did, we were somewhat surprised at the openness of these younger individuals to consider the purchase of preneed insurance.  I think, as wages have increased and discretionary income has also increased, it is time for death care businesses to look at lowering that age of a preneed consumer target.  Getting that discretionary income and letting it go to work as an investment for a potential clientele for a longer period of time should provide for a greater sum for the eventual services.


This is a little out of the box, but maybe state governments should look at a one-time tax deduction for those that put money away to cover eventual death care expenses.  Potentially, there may be some savings for government entities who provide social service funds for those who cannot take care of these expenses when they die.


I also think, much like Aflac supplemental insurance, maybe it is time for preneed to be included as an option in one’s employment benefit options.  If done in that context it would be a pre-tax benefit to consumers and I can envision employees in the 45 to 65 year-old age brackets including a payment in their monthly employee benefits.


Finally, maybe preneed companies need to look a little out of the box also in efforts to draw younger clientele to their products.  While I don’t know their financial outcomes or profitability, I’ve somewhat been intrigued by the British company Dead Happy, who has done just that by tying “Death Wishes” to their life insurance products for the general population.


More news from the world of Death Care: 


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