Losing a loved one is always difficult, but the financial concerns of arranging a funeral can cause additional anxiety. From choosing the right funeral director to making a claim on the deceased's life insurance policy, there are many things to take into consideration.

Arranging a funeral

Funerals are expensive. The average cost of a burial service, excluding the headstone, is £3,307. At a crematorium it is £1,954, but costs can easily spiral beyond this. For example, you will pay more if you want to be buried or cremated in a borough in which you do not live at the time of your death.

Some people may have already planned and paid for their own funerals, but it can be daunting if you suddenly find yourself having to arrange a loved one's send-off. At some point you will need to work out how you are going to pay for it all.

Paying for the funeral

The bank account of the person who has died will be frozen, unless it is a joint account. In some cases the bank may agree to release funds to cover funeral costs, but it is not obliged to do so until probate is granted. If the bank does not release funds, you may have to pay for the funeral and then recover the money from the estate of the deceased.

There are several things that you need to check about the deceased when paying for a funeral. First, was he or she a member of an occupational pension scheme? Some schemes pay a lump sum to help with funeral costs and sometimes pay pension benefits to widows or other dependents. There may also be money payable from the deceased's trade union or professional body, so contact such organisations directly to find out.

The deceased may have taken out a life insurance policy that provides a lump sum when someone dies. Payment is usually made after grant of probate, but the insurance company may pay out a limited sum on evidence of death.

Finding a funeral director

Most people make funeral arrangements through a funeral director. However, it is important to check that the company you choose is a member of one of two trade associations: the National Association of Funeral Directors (NAFD) or the National Society of Allied & Independent Funeral Directors (SAIF).

Costs can vary significantly between different funeral directors, so always obtain more than one quote. They should provide detailed price lists for you to take away and consider, so do not feel pressured into agreeing to anything immediately. Also ask for written details of all disbursement fees, which may include a doctor's certificate, newspaper announcements, flowers and crematorium or burial fees.

Some people prefer to make their own arrangements because this can be more personal and less expensive than going through a funeral director. Mike Jarvis, of the Natural Death Centre, the charity, says: "This would involve collecting and storing the body and making all the funeral arrangements. While it may not be suitable for everyone, some people take great comfort in arranging a funeral themselves."

The Natural Death Centre helpline can advise on arranging a funeral yourself. Call 0871 2882098.

Green options

By 2010 it is expected that 10 per cent of all funerals will be environmentally friendly. Some cemeteries have a specific section of land for green burials, while the Natural Death Centre has established 228 natural burial grounds in the UK over the past 15 years. These sites include woodland, meadows and farmland.

Mr Jarvis explains: "These burial grounds are used for unembalmed bodies to be buried in a biodegradable coffin. Instead of a headstone, there will be trees, plants or wildlife. Not only are traditional headstones expensive, they are also bad for the environment, particularly as the materials used are often shipped in from abroad. At a green burial, graves are simply marked with a biodegradable wooden cross."

Natural burial grounds are usually cheaper than sites at municipal cemeteries, although biodegradable coffins can be more expensive.

If you are considering a green funeral, you should investigate whether the land has a deed or trust in place to protect it from commercial exploitation in future. John Weir, of SAIF, says: "Check with your local authority that there is permission to use the land as a burial site. Once permission is granted, it is unlikely that the remains will be disturbed."

Financial help

If you are on a low income and need help to pay for a funeral, you may be eligible for a social fund funeral payment of up to £700, plus reasonable disbursement fees. The payment is means-tested and you must be receiving certain benefits to qualify. You may have to repay some, or all, of the money from the estate of the person who died, but if there is no money from the estate, you will not be held liable. To make a claim, contact Jobcentre Plus on 0800 0556688.

If your spouse or civil partner has died in the past 12 months and you are under 65, you may be eligible for a bereavement payment. This is a one-off tax-free lump sum of £2,000. There are various other benefits to which you may be entitled after a bereavement. These include community care grants, crisis loans and the war widow's or widower's pension. For information on how to claim, go to Direct Gov.

Five news stories

Burial is best — but you can scatter your ashes if you must, rules Vatican

Funeral costs surge by 61%

Church sounds death knell for ‘ash cash’

£8 tax adds to mourners' grief

Co-op is attacked as 'crass' over gay funeral branding

Five features

Say nighty-night, but not with a hymn

Going out in style

Till death do us party

No PowerPoint at the funeral please

Breakthroughs, tips and trends: mock funerals

Five websites

National Association of Funeral Directors

National Society of Allied & Independent Funeral Directors

The Natural Death Centre

Direct Gov

Consumer Direct