Why unexpected funeral costs are landing people in debt
31 May 2016
Few people realise the full cost of a funeral, so it often comes as a surprise when a loved one dies unexpectedly or without funeral cover in place and suddenly they are left to find the money.
Here, we look at the alarming trend of people resorting to credit options to meet these costs.
Payday loans, whereby lenders provide lump sum payments (often with high interest rates attached), are being increasingly used to fund funerals, according to the British Seniors Insurance Agency. In fact, a startling report indicated that 1.2 million people had taken out loans of this type for the purpose of paying for a funeral.
This trend has emerged due to the ease of which the funds can be accessed and because funeral costs have seen such a significant increase. This is largely thanks to rising third party fees such as those charged by crematoriums, cemeteries and celebrants.
The detrimental effect that payday loans can have on customers and the wider society is generally well documented. In fact, search giant Google recently banned such lenders from advertising on its search engine. US Human Rights group leader Wade Henderson said of the move: “These companies have long used slick advertising and aggressive marketing to trap consumers into outrageously high interest loans - often those least able to afford it." That this type of funding is increasingly being used to pay for funerals is of great concern to economists.
An efficient way to ensure loved ones do not need to resort to using credit to pay for your funeral is to have funeral cover in place. Pre-paid funeral plans enable people to take responsibility for making financial provision for the inevitable cost of their own funeral and help to ensure that loved ones are not tempted – or forced - to use credit. While funeral plans are not the only way to help protect friends and family from the sums associated with a funeral, they can provide excellent value.