If you had to hear that 2.7 million Britons have used credit cards, payday loans and personal loans to pay for funerals of family and friends, what would you think? When you further hear that the average cost of funerals is forecast to increase by 22 percent over the next decade, what then? Hopefully, these questions lead you to thinking about your own financial position - whether you're sitting in the precarious position of not being able to cover an unexpected funeral; or if you're totally in the green, and not in need of financial help. Being in the green doesn't mean not having to touch your savings and could potentially destroy a growing nest egg. We suggest checking some online life insurance quotes and see how you can prevent your family and friends having to pay steep amounts for funeral arrangements.
Only 21 percent of UK adults have life or funeral insurance cover in place to absorb the costs of a funeral. Londoners were found to be the most unprepared for the costs: 39 percent of them take payday loans (totalling £256 million) and 40 percent take credit cards, spending a total of £183 million altogether. Who are these people using credit to cover funerals? Some of the key findings from the research recently commissioned by British Seniors Insurance Agency indicated that the youth have taken the responsibility of paying for funerals and the financial strain that may come with it.
In the 18 - 34 age group, 44 percent used or took out credit cards and 27 percent had to resort to using payday loans. In the last five years, the age group has borrowed £464 million from payday loan companies and £338 million on credit cards to cover funeral costs. However, it seems that credit is only a secondary response to covering funeral costs. Personal savings have also taken a big hit as people have withdrawn £870 million from nest eggs because life cover, funeral cover or other necessary provisions have not been in place.
|Payment Method||All who paid for a funeral|
|Amount taken from own pocket||£936 million|
|Amount taken from savings||£870 million|
|Amount taken from pension||£779 million|
|Money borrowed from family or friends||£637 million|
|Payday loan||£576 million|
|Personal loan||£537 million|
|Credit Card||£485 million|
Source: British Seniors Insurance Agency & Opinium Research data
(15 - 18 January 20163)
Despite being the age group most affected by funeral costs, with almost half of them using or taking out a credit card and a quarter of them using payday loans, pre-planning or pre-thought regarding payments is not something done by the 18 - 34 age group. When asked to imagine that they were responsible for the funeral of a loved one tomorrow, 40 percent of UK adults assume that it will be paid for by the estate, 23 percent thought that they would pay for it out of their own pockets or savings. Only two percent anticipated using credit cards (contrary to the actual data) and 17 percent don't know how the cost will be covered. The proportion of adults who don't know how the costs will be covered rises to 25 percent for the 18 - 34 year-olds who are most affected.
For those who don't know who will cover the funeral costs and those looking to pay for it out of their own pockets, not knowing the price could be their main disadvantage. British Seniors Insurance Agency examined the average funeral cost over the next ten years, based on the forecast CPI. The cost of funerals is set to go up 22 percent, such that an average funeral is £5,066 by 2026, having risen with inflation.
Dave Sutherland, Managing Director of Neilson Financial Services comments:
"Our research reveals that many, particularly the younger generation, have to resort to forms of credit resulting in their grief being made worse at what is already a difficult time. [...] With the new Lifetime Payback Guarantee we ensure customers get full value for their hard-earned cash as they will never get back less that they've paid in. We want to encourage people to make sure that they have some form of life insurance or cover in place so as to provide peace of mind that when the inevitable happens they've got it covered for their loved ones."
The key product features of the Over 50s Life Insurance with the Lifetime Payback GuaranteeTM are:
- Customers can get benefit amount from £2,000 to £20,000 and premiums start from as little as £6.47 a month (for a 50 year-old and £2,000 benefit amount)
- Customers (50-79 years old and UK residents) are guaranteed to be accepted with no health or blood tests
- Should a non-accidental death occur in the first 2 years loved ones will receive all premiums paid in (after 2 years, cover is provided for death due to any cause)
- Premiums are fixed and do not increase
So, if you're still scratching your head wondering how family members will be covered in case of accidental or non-accidental death, then the answer is at hand. In partnership with Scottish Friendly, an insurance company with over 150 years of insurance heritage, Neilson Financial Services bring you flexible, straightforward insurance; particularly for those over 50 who wish to save and safeguard their nest eggs.