The figure, which includes costs such as probate, headstones and flowers as well as the funeral, varies significantly across the regions, with London the most expensive at £9,556, Sun Life Direct found. W ales is the least expensive with an average cost of £6,096.
The cost of a funeral has also increased by 5.3% since last year to £3,456, or 80% higher than in 2004, with the average burial costing £3,914 and a cremation costing £2,998.
The insurer found that this year's increase was mainly due to a rise in cremation and burial fees, which are usually controlled by local authorities. Burial fees have risen by 69% since 2007 and cremation fees by 51%, according to the report.
T he average amount spent on funeral extras such as flowers, catering and limousines increased £83 to £2,006.
Almost one in five people (18%) who have organised a funeral in the past four years have struggled with the cost, with the average shortfall rising from £1,246 to £1,277 year on year.
"As funeral poverty has increased 50% in just three years, something must be done as a matter of urgency before more families are unable to give their loved ones the send-off they deserve".
Dr Kate Woodthorpe, a lecturer in sociology at the University of Bath, said: "It is disappointing that the number of people who struggle to afford a funeral shows no sign of abating. Funeral poverty has increased more than 50% in the last three years and it is likely that this will continue.
"The notable postcode lottery of funeral costs, especially in terms of cremation and burial costs, is particularly troubling. People need to realise that death is one of the few certainties in life and must be addressed ahead of time so that plans can be made with regard to who will pay for their funeral, and how."
:: Mintel surveyed 1,507 UK adults and 100 funeral directors between March and May.
Alan Slater, chief executive of the National Association of Funeral Directors, said: "The report supports the NAFD's own research which shows that an increasing number of people are falling into funeral poverty and that there is an average £1,277 shortfall between the limited support available from the Government's Social Fund and the cost of a basic funeral.
"Sadly, this is often leading either to the bereaved being forced into the arms of payday loan companies or, increasingly, leaving funeral directors with unsustainable levels of debt.
"The NAFD has long campaigned for increases to the Social Fund. The average payment of £700 plus disbursements has not increased since 2003, and less than half of those who apply are successful anyway."
The proposed changes to death certification in England and Wales next year would simply make matters worse by levying an additional fee on all burials, Mr Slater said.
"We would advise people to make financial provision for their funeral and also to discuss, with their loved ones, what their funeral wishes would be - so that in the event of their death, their bereaved family can be certain that the funeral reflects their wishes."