Credit card and payday loans for funerals
A study from an insurance company reveals that people have taken drastic measures to pay for funerals and manage the affairs of deceased friends and family.
The research from British Seniors Insurance Agency reveals that people in the UK have, collectively, spent £4.8bn on funerals for their loved ones over the last five years.
And to fund these, 2.7 million have taken out finance in the form of credit cards, personal loans or payday loans because life cover, funeral cover or other provisions have not been put in place. The total spend has been £1.6bn.
The research shows that the biggest proportion of people (27%) are dipping into their own pockets or savings but 1.2 million people have opted for controversial payday loans to pay for the funeral of a loved one.
Londoners lead on this, with 39% of those in the capital taking out a payday loan and 40% taking out a new credit card.
Almost three-quarters of the 18 to 34-year-old age group have gone down one of these routes.
This generation is also most likely to be responsible for managing the affairs of a loved one, with a quarter organising clearance and sale of the home, and sorting out administrative tasks as well as money.
When asked what they would do if needing to organise the funeral of a relative or loved one tomorrow, 40% of the UK adults surveyed assumed the cost would come out of the estate, while 23% thought they would have to pay out of their own pocket or savings.
Only 2% anticipated they would have to pay by credit card or payday loan, with 17% saying they didn’t know. However, the proportion of the latter rose to 25% for the 18 to 34-year-olds.
In the research, people estimated the average cost of a funeral to be £3,733. British Seniors Insurance Agency calculated that the average funeral cost would rise to over £5,000 by 2026.
The company also says that only a fifth of UK adults have life or funeral cover in place to cover their funeral costs. Londoners are most unprepared, with those in the North East and Scotland most likely to have life insurance in place.
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