WHAT IS FUNERAL INSURANCE?
Death is an inevitable experience of life; it’s the end of one life and the beginning of another life. However, when you die, you don’t know what happens next. There will be invoices associated with your last moments on earth. So, to address these post-life invoice issues, the insurance industry has created a coverage called ”final expense insurance”. It is also commonly known as a burial insurance and most people think it’s a bad investment, but as I discuss details of this type of coverage, you will get to appreciate this policy.
This funeral policy covers expenses related and associated with death. These includes burial, funeral service arrangement, cremation and more. Since all these expenses are catered for by the insurance company, your family will not be burdened by any further costs.
HOW TO BUY FUNERAL INSURANCE?
- WHAT ARE YOUR NEEDS? It is good to plan ahead of time and list down what you need to be done on your last day. It is best to discuss with your insurer about the specific requirements as this will determine the services to be included under your insurance cover, which in turn will affect the premium you pay for this particular insurance. Obviously, the more services you want to be done by your insurer, the higher the cost. You can do a Google search to find out about the various costs. However, I have already done all the hard work for you and compiled an estimate of how much you will pay for different funeral options. Please bear in mind that the costs vary from company to company.
- Casket: If you want your insurer to provide a casket, you will spend anywhere from $500 to $10,000, depending on the quality of casket you want.
- Funeral Service: This may include a combination of items, for example: the funeral director’s fees, transportation of the deceased, funeral procession, a service at the crematorium/church/graveside, doctor’s fees for issuing of a death certificate and more. The average cost will be around $2,000 – $8,000, depending on what your insurance plan covers and will vary from state to state.
- Burial Plot: The rate for this coverage will depend on the value of land in your area or state. In general, a casket will not take too much space and the cost can vary from $2,500 to $10,000.
- Memorial: This is relatively affordable but depends on your insurer. That is why I advise you to make comparisons on different funeral insurance providers. You will on average spend around $500 to $4,000.
- Cremation: Cremation is less expensive compared to a traditional burial. All it requires is an urn and the cost of carrying out the cremation.
- Green Burial / Natural Burial: This is the most simplistic and natural method of burial. It is also much cheaper because your body will be laid in a natural / biodegradable casket directly in the ground which allows the elements to return to the soil over a period of time. This method of burial is not permitted in every state. If you are interested to locate a natural funeral service provider, you can click here.
- PAY FOR YOUR FUNERAL EXPENSES IN ADVANCE: This can done in two ways, you can either pay for this coverage using your life insurance policy or buy a special funeral insurance policy. Either way, money paid to the insurer will be used to cater for burial expenses. When buying or paying for funeral insurance, you may consider making a lump sum payment; this will cover for all essential expenses during the funeral process. Most people think that full lump sum coverage are for old people only, therefore, they opt for a graded benefit policy which has limitations and restrictions. For example, if you decide to pay for this policy over a period of 5 years and you die today or tomorrow, your family will only be able to get any benefits after the 5 year period.
- BUY A PRENEED INSURANCE POLICY: You can buy this type of insurance directly from a funeral home. You can do this when you are guaranteed to die very soon, or when you don’t want your family to face extra financial stress from expensive funeral costs at a difficult time. You can find licensed insurance agents at funeral homes. It is best to talk to them and ask them about a suitable package for you. Preneed policies are classified into two types: (1) Guaranteed & (2) Non-Guaranteed. With a guaranteed preneed policy, the holder has a 100% guarantee that funeral costs being charged will not change. However, with a non – guaranteed policy, costs can change at any time due to market values. So, be very careful when choosing between a guaranteed and a non-guaranteed preneed policy.
WHAT IF I DON’T GET A FUNERAL INSURANCE?
Chances are very low that you won’t get this coverage. The only thing which can stop you from qualifying for a funeral insurance is ”MONEY”.
So, if you don’t have enough money to finance the policy before death, you should consider putting some money aside to cater for funeral expenses. On the other hand, there are cheaper options, i.e. you can opt for a green/natural burial or cremation.
FUNERAL INSURANCE COST
In 2010, the average cost of funeral insurance was about $10,000. However, due to change in the economy, these costs have increased dramatically. However, you may still find a low cost coverage in the range of $5,000 – $10,000 if you do enough research. To get current funeral insurance rates, you can try out different life insurance companies, fill in the form and get a quote. Below is an example of a quote I obtained from Statefarm.
WHO HAS TO GET A FUNERAL INSURANCE POLICY?
This is a personal decision as to whether you want or you don’t want to get this type of coverage. This coverage is very common in aged people and very sick people who have minimal chances of living much longer. Once you have considered applying for funeral insurance policies, you need to give some thought to your finances. This is because the most effective way you can benefit from this coverage is when you make a lump sum payment. I have listed below some other factors you may wish to consider in relation to a burial insurance policy:
- NO LIFE INSURANCE: If you’re not covered by a life insurance policy, you should definitely look into a burial insurance policy. A life insurance coverage will pay out a death benefit to the beneficiaries nominated by yourself in the policy. And this money can be used to cover your funeral expenses. However, if you don’t have a life insurance policy, a funeral insurance coverage will cater for your funeral expenses.
- NO OTHER MEANS TO PAY FOR FUNERAL EXPENSES: When you are getting very old, your income will decrease as you are getting less productive. It is generally the case that as you age, you are only working part time or on a casual basis and therefore rely more on savings and pension money. Therefore, it is best to obtain a funeral insurance policy when you still have money so that your funeral expenses are sorted in advance.
- LIMITED / NO SAVINGS: I guess this is not new to anyone; we have all been through tough times and it is hard to make ends meet. Money is like wind, today you may have lots of it and tomorrow it’s all gone. You may be in the process of saving money to buy yourself a burial insurance policy, but suddenly something urgent comes up and you have to expend it all. You just need to think that once you pass, you don’t want your family to face extra financial stress at a difficult time.
- NEED FOR A SEPARATE POLICY: You may already have a life insurance policy, but you may also want a separate funeral insurance policy. In some cases, this is because you have nominated different beneficiaries in the two insurance policies.
HOW TO CHOOSE A FUNERAL INSURANCE PLAN
Trust me, planning for your own funeral is very emotional, most people don’t want to think about their last day on earth. When you pass and find yourself on the other side of life, funeral arrangements have to be made so that your body is respectfully taken care of. This process is costly and the best way to reduce the burden on your family is to plan for these expenses when you’re still alive. You can do this by selecting a suitable death insurance policy; make sure the coverage you opt for has all the benefits you wish. If you want more information, you can talk to an insurance agent, who will take you through the entire process or read my next article on the BEST BURIAL INSURANCE COMPANIES.
The above information provides overview of Funeral Insurance. Now you can contact a insurance company for a quote.