The report, The Funeral Time Bomb, commissioned by OneFamily from the ILC-UK looked at the effect of current trends on the cost of funerals.
It warns that 2015 will see the oldest segments of the babyboomer generation reach their final years with deaths likely to increase by 20% as a result.
The cost of a simple funeral is likely to rise to £5,226 with costs having already increased 80% in the decade between 2004 and 2014.
The total spending on funerals in the UK could rise to £3.7bn in 2020 from £2.8bn in 2014 the report warns.
Simon Cox, a funeral cost expert at Royal London Group said: “This new report is spot on.
“It gathers insight from a broad range of sources – including Royal London’s National Funeral Cost Index – and confirms, yet again, what numerous experts have been saying for many years: the cost of a funeral is rising and drawing many people into debt.
Cox added: “We believe a fundamental review of the ‘Social Fund Funeral Payment’ system (the UK’s funeral state safety net) is required – it is incredibly important but increasingly inadequate.
“For example, its cap of £700 (designed to meet ‘other funeral expenses’) isn’t index-linked to inflation or adjusted to reflect current UK living costs; it also asks bereaved relatives to commit to significant funeral costs when they have no idea if they will qualify for a payment or how much it might be.
“The International Longevity Centre is right to refer to the issue as a ‘time bomb’.
“The combination of rising funeral costs, rising number of deaths, plus an inadequate state safety net will not only continue to drive poverty, but also means we are likely to see a rise in the usage of Public Health Funerals – with haunting echoes from Victorian times.
“We foresee an increasingly polarised society divided between those who can and those who can’t afford a funeral – a society willing to take on significant debt to pay for a decent funeral.”