Funeral Insurance: Paid-Up Life Or Extra Expense?

Funeral insurance, also known as burial insurance or final expense insurance, is a type of life insurance policy designed to cover funeral, burial, and other end-of-life expenses. It is a small policy that specifically covers funeral expenses, usually ranging from $5,000 to $25,000. The average cost of a funeral is between $7,848 and $9,000, so funeral insurance can be a helpful way to ease the financial burden on loved ones. While life insurance policies can also be used to cover funeral costs, funeral insurance offers faster payouts, typically within 24 to 72 hours, making it a more convenient option for families.

Burial insurance is a type of life insurance policy that can be used to cover funeral expenses

Also known as funeral insurance, final expense insurance, or pre-need insurance, burial insurance policies are usually purchased for amounts ranging from $5,000 to $25,000. This is intended to cover funeral and burial costs, including funeral home services, the opening and closing of the grave, a headstone, a casket or urn, and cremation if chosen.

The application process for burial insurance is often simple, and in some cases non-existent, with no medical exam required. Premiums are payable weekly, monthly, or annually, and the payout time for the death benefit is much faster than typical life insurance policies, which can take 30 to 60 days. This quick payout helps loved ones cover funeral costs without having to use their own money and wait for reimbursement.

In addition to funeral and burial costs, the beneficiary of a burial insurance policy may use the payout at their discretion to cover the deceased's debts, including medical bills, credit card bills, mortgage loans, and personal loans. This flexibility can provide financial relief for grieving families.

When considering burial insurance, it is important to research different providers and compare multiple policies to find the best fit for your needs and budget. Factors to consider include the coverage amount, the availability of support services for your family, and whether a medical exam is required.

Life insurance policies can cover funeral expenses, but some policies are better suited for this than others

Funerals are expensive, with the average price of a traditional funeral service reaching $8,000. This is why many families consider using life insurance to cover funeral expenses and burial costs after a loved one dies.

There are several types of life insurance policies that can be used to cover funeral expenses:

• Burial insurance, also known as funeral or final expense insurance, is a type of whole life insurance policy designed to cover funeral, burial, and other end-of-life expenses. It is ideal for individuals who want coverage only for these expenses. Burial insurance is often more affordable than other types of life insurance due to its lower coverage amounts, and it does not require a medical exam to qualify.
• Whole life insurance is a permanent life insurance policy that covers the insured for their entire life and pays out to beneficiaries regardless of when the insured dies. The premiums are more expensive but guaranteed to stay the same throughout the policy. Whole life insurance is a good choice for those who can afford the higher premiums and want to leave money to their heirs.
• Universal life insurance is another type of permanent life insurance that offers more flexibility than whole life insurance. The death benefit and premium can be adjusted at any time, and a portion of the premium can be borrowed against or withdrawn without decreasing the death benefit. However, this type of policy requires more attention to monitor as the growth of the cash account is tied to the current interest rate.
• Term life insurance can also cover funeral costs, but it will expire if the insured outlives the policy term.

While most life insurance policies can cover funeral expenses, the process of obtaining the payout is not always simple and can take time. It is important to plan things out in advance and have a clear understanding of how the policy works to ensure that the funds are available when needed. Additionally, the number of beneficiaries can affect the total distribution, so the person paying the funeral costs may not receive enough to cover all the charges.

Funeral insurance is designed specifically to cover funeral costs and other end-of-life expenses

Funeral insurance, also known as burial insurance or final expense insurance, is a type of life insurance policy designed to cover funeral, burial, and other end-of-life expenses. It is a simple policy that offers guaranteed coverage and does not require a medical exam. The average cost of a funeral and burial in the United States is $7,848, and with a vault—required by many cemeteries—that number rises to $9,420. The average cost of a funeral and cremation is a little lower, at $6,971.

Funeral insurance policies typically cost less than typical life insurance policies and are specifically meant to cover the costs of funeral services and other end-of-life expenses. The policies usually pay a death benefit of $5,000 to $25,000. Unlike pre-paid plans at funeral homes, funeral insurance has no restrictions on how beneficiaries can use the money. For instance, they can use the money for medical bills, final utility bills, or anything else.

Funeral insurance is ideal for individuals who want coverage only for end-of-life expenses, including their funeral. It is also a good option for those who cannot qualify for a whole or term life insurance policy. The application process for funeral insurance is usually easy and, in some cases, non-existent. However, because of the lack of a rigorous application process, these plans usually only pay out a prorated amount to beneficiaries based on how much the policyholder has paid in already.

One of the main benefits of funeral insurance is the faster payout time for the death benefit. Typical life insurance policies take an average of 30 to 60 days to pay the death benefit. If the loved ones of the deceased don't have the funds available, burying their loved one becomes difficult and stressful. With funeral insurance, the payout is much faster, usually within a few days, ensuring that the funeral costs can be covered without delay.

The average cost of a funeral is between $7,848 and $9,000, depending on whether you choose cremation or burial

The average cost of a funeral is $7,848 for a viewing and burial, and $6,970 for a viewing and cremation. These figures do not include the price of a cemetery plot and a headstone, which can add nearly $5,000 to the overall cost.

The average cost of a funeral has been rising steadily since the 1980s and can now exceed $10,000. The cost of a funeral includes a range of services, such as the transfer of remains to the funeral home, preparation of the body, facilities for viewing and the funeral ceremony, and basic memorial packages.

Funeral homes typically charge a basic service fee, which covers funeral planning, coordination with the cemetery, obtaining permits, publishing obituaries, and getting copies of the death certificate. This fee usually ranges from $2,000 to $2,500.

Embalming, cosmetic services, transportation of the deceased, and use of facilities for viewing and the funeral ceremony incur additional costs. These can range from a few hundred to a couple of thousand dollars.

The cost of a casket or urn can also vary widely, with average prices ranging from $1,300 to $5,000 but can sell for as much as $10,000 or more.

When planning a funeral, it is important to consider the various costs involved and decide which services and items are essential. Comparing prices from multiple funeral homes and purchasing certain items from third-party retailers can help keep costs under control.

Life insurance policies, including final expense insurance and burial insurance, can be used to cover funeral costs and ensure that loved ones do not bear the financial burden.

There are several ways to pay for a funeral without insurance, including savings accounts, payable-on-death accounts, and fundraising

There are several ways to pay for a funeral without insurance. Here are some options:

Savings Accounts

One option is to open a savings account dedicated to funeral expenses. This requires discipline to ensure that money is consistently deposited and not used for other expenses. It's important to remember that interest rates on basic savings accounts are typically low, so the account may not grow quickly. To boost savings, consider adding extra funds from bonuses or tax refunds. However, it's important to note that it could take a significant amount of time to save for a funeral, especially if you're aiming for the average cost of $9,000.

Payable-on-Death (POD) Accounts

A payable-on-death (POD) account, also known as a Totten Trust, is another option. This type of account allows you to name a beneficiary who can access the funds in the account upon your death. During your lifetime, the account accrues interest, and you can withdraw funds if needed. One advantage of a POD account is that it avoids the delay of probate court, allowing your beneficiary to access the funds directly. However, like a regular savings account, it requires discipline to ensure sufficient funds are available for funeral expenses.

Fundraising

Fundraising is another way to cover funeral costs. Families or friends may organize events such as concerts, bake sales, or other activities to raise funds. Online crowdfunding platforms like GoFundMe, indiegogo, or Kickstarter are also popular tools for collecting donations. These platforms can be used to pay for funeral costs and sometimes even additional medical expenses.

Prepaid Funeral Plans

Prepaid funeral plans involve working directly with a funeral home to plan and pay for funeral arrangements in advance. You can choose to pay all at once or over time. The benefit of this approach is that your family won't have to make decisions or incur expenses when the time comes. However, there is a risk that the funeral costs may exceed the amount paid, and your loved ones may need to cover the difference. Additionally, changes in the funeral home's ownership or business status could impact your plan.

Government and Community Assistance

There are also assistance programs and benefits available to help with funeral costs. For example, the federal government provides a one-time lump sum payment of $255 to the surviving spouse or qualifying child of the deceased. Veteran's benefits may include a free burial and headstone in a national cemetery, especially if the veteran was on active duty or died from service-related injuries. Local churches may also offer reduced-cost burials or other support.

Frequently asked questions