Councils collectively spent £6.3 million on so-called paupers’ funerals in 2018/19, according to calculations.
But not all local authorities return ashes by default to bereaved families following cremations and some charge for this to happen, Royal London found.
A pauper’s funeral, or public health funeral, is arranged by the allocated local council when someone has died in cases where there is no traceable family, or the family is unable or unwilling to arrange and pay for a funeral.
Royal London made the findings after receiving 383 responses from local authorities across the UK to Freedom of Information (FOI) requests.
The total spend on public health funerals in the financial year 2018/19 was £6.3 million, with more than 4,000 public health funerals taking place.
The average cost of a public health funeral to local councils was £1,507.
Nearly a third (29%) of public health funerals were undertaken by local councils because bereaved families were unable to afford the cost, the mutual insurer said.
It also found that 21 councils in the UK by default do not return ashes to the family after a cremation funeral and 18 councils charge bereaved families for the ashes to be returned.
Charges varied between £10 and £18.
Of the councils who explained why they charge for ashes to be returned to families, reasons included the cost of the urn to the council or a collection cost.
Royal London asked local councils if they allow family members to attend a public health funeral.
Of those who responded, 14 said they do not.
Reasons given for not allowing family attendance included that there is no service provided by the council for a family to attend.
Royal London is calling for legislation on minimum standards for public health funerals.
Louise Eaton-Terry, funeral cost expert at Royal London, said: “It’s incredibly sad when bereaved families have no choice but to seek a public health funeral.
“But when some families are refused the ashes of their loved ones or are not even allowed to attend the funeral, it is clear that they are being treated unfairly.
“It’s about time the system was overhauled, and we’re calling for legislation on minimum standards for public health funerals to ensure everyone can, at the very least, attend a funeral and collect their loved one’s ashes.”
A spokesman for the Local Government Association said: “Public health funerals are a last resort for those cases where family or friends cannot be identified to arrange a funeral, or no-one is willing to do so.
“When arranging these funerals, councils will seek to ensure the religious beliefs or wishes of the deceased are respected and they are provided with a dignified funeral, while keeping the costs to local taxpayers to a minimum.
“In many cases the deceased has no family to arrange their funeral, so there is no-one to attend a service if one is held or to collect the ashes.
“Where family members are unable to afford the cost of the funeral those who receive income related benefits can apply for a funeral payment, and last year the Government announced an uplift in the grants made available, though these may not cover the full costs of a funeral.
“With local authorities facing challenging funding pressures the increase in the number of public health funerals is putting further pressure on council budgets, and driving them to limit the costs they incur in arranging these funerals.”