Funeral Insurance: The Why, When, & How To Plan Ahead (2019 Edition)
“Death is not anyone’s favorite topic…”
My dad lives in northern Minnesota. The summer season is exceptionally short, and the cold is already settling in like a dense, heavy fog even though it is only October. Last summer, my father lost his beloved wife, and now, he is making the long trek to my house in Michigan for a visit before he continues his journey south in search of warmer weather. Last week, during a phone conversation, he casually brought up a topic he would like to discuss during his visit. I am my father’s only child, and he will be 80 next year – he wants to review his trust and funeral plans.
I listened to my father’s words longing to cover my ears like an insolent child. Death is not anyone’s favorite topic of conversation and, as an only child, I know that I have a responsibility to make sure his last wishes are granted. I took in a deep breath and told him I’d be happy to go over his plans with him. As we continued our conversation, my mind wandered off as I thought about my own adult children. Even though I regularly write about topics concerning death, it doesn’t give me superpowers. Like many other people, I procrastinate thinking about my death and the various options available to celebrate and pay for it.
Suggested Read: My Loved One Wants To Talk About Pre-planning Their Funeral
What Is Preplanning Your Funeral
Preplanning a funeral is the gift we give family members, so that they will not have to make costly or uninformed decisions about funeral arrangements during a difficult time when most are experiencing shock and denial – the initial stage of grief. Just last night, I heard a story about a family who was in the throes of a divorce. The father died unexpectedly, and the estranged wife refused to pay for his funeral. His children were young, so the unexpected financial burden fell on the father’s brothers and sisters. Preplanning a funeral can save loved ones money, time, and unnecessary stress.
1. Funeral Cost
The average funeral costs between $7,000 and $12,000. This price includes viewing and burial, basic service fees, transporting remains to a funeral home, a casket, embalming, and other preparation. The average cost of a funeral with cremation is $6,000 to $7,000, which does not include a cemetery, monument, marker, or other items such as flowers.
Funerals are expensive and their costs are increasing every year.
2. Financial Burden
Planning ahead to cover funeral costs is a wise investment. “More than three-quarters of workers (78 percent) are living paycheck-to-paycheck to make ends meet – up from 75 percent last year and a trait more common in women than men – 81 vs. 75 percent,” according to CareerBuilder research.
To go into debt to cover the cost of a funeral is an unnecessary hardship. These days, one can purchase funeral insurance, create a funeral trust, or opt for a prearranged payment plan to pay for funeral costs.
3. Final Wishes
If you want to have an interesting conversation, ask your friends or loved ones about their final wishes. Last night, I learned that preferences are particular for unique reasons. Some people do not want to put extra strain on the environment and want an eco-friendly funeral, others like to honor tradition and want a burial, while some desire cremation and know exactly how they want to dispose of their ashes. Surprisingly, one friend shared that she would like to be buried in a tree. Specific preferences can’t be honored if nobody knows what they are. It is important to let family know your final wishes and to record them in a funeral plan.
Detail is important.
Don’t hesitate to let family members know your music or reading preferences, food selection for the luncheon venue, or even the epitaph for your headstone. Expressing all of these seemingly small decisions in a funeral plan will relieve your family of needless stress when the time comes.
4. Get Your Affairs in Order
In fact, getting our affairs in order relieves our own stress. Thinking about our family struggling to pay our final bill based on emotional decisions they made while under duress is a weight that nobody needs to carry. It is empowering to take care of our final business in a way that matches our desires and budget. Indeed, It is our final, individual responsibility to ensure our affairs are in order and our last tribute to those left behind.
5. The Gift of Preplanning
By easing the burden on your family, you leave them with an invaluable gift. At the time of a loved one’s death, family is exhausted, emotionally drained, and on edge. With preplanning in order, there will be no reason to debate whether or not mom wanted an open or closed casket or who should give the eulogy or readings. There will be no guessing as to whether or not the deceased wished to be cremated or buried. Finally, the family will have no reason to disagree about the expenses for the arrangements because they were handled ahead of time.
By preplanning one’s funeral, the focus is where it should be at the time of death – honoring a family’s loved one.
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When to Pre-Plan Your Funeral
According to Louise L. Hay, “The point of power is always in the present moment.”
Take time now to begin thinking about pre-planning. After all, there are many things to consider and shopping around can save your family a significant amount of money. One option is to purchase funeral insurance, also called burial, final expense or pre-need insurance. People purchase funeral insurance to ensure their funeral is pre-arranged and paid for.
Suggested Read: When To Have The Conversation Around Pre-planning
How to Plan Ahead
There are three forms of coverage for funeral expenses, and in most states, these policies are written by life insurance agents or funeral directors.
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Depending on the amount of coverage, life insurance with a family member as the beneficiary may leave enough money to include funeral expenses. However, an individual can purchase final expense insurance if they do not have life insurance. Generally, final expense insurance is used to pay for funeral expenses. As with life insurance, a family member is designated as the beneficiary. Be sure to share your funeral plans with your designated family member.
Life Insurance with a Funeral Director as Beneficiary
A funeral home may offer a small, whole life policy with a contract for a death benefit that goes directly to the funeral home as partial or full payment for funeral expenses. Because the funeral director is the beneficiary, the death benefit will not go to family members. This guarantees the money is used for the funeral.
This is a contract with the funeral home that covers items like the casket or urn, burial plot, grave marker, embalming or cremation, flowers, and transportation. The benefits of preneed insurance include:
- Prices are locked-in
- Pre-need insurance can be used to help a person qualify for Medicaid
- Typically funds are available within 24hrs
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Another option to prepay for a funeral is a funeral trust. This is a contract entered into with the provider of the funeral or burial service – often a funeral home. The provider may agree to lock in costs for a future burial at an agreed-upon price. The trust can be funded with cash, bonds, or life insurance. If it is a revocable funeral trust, it can be changed or revoked by the purchaser at any time. Conversely, an irrevocable trust cannot be changed and the only way to remove the money is to pay for the funeral service. Because the funeral provider serves as the trustee or manager of the assets, it is important to choose a reputable and trustworthy provider.
Funeral Planning Checklist
Many people would like to pre-plan their funeral but don’t know how to start. Although planning a funeral requires a lot of decision making, there are numerous resources online to help with organization. Consider using a funeral planning checklist that includes the following:
- Documents and items to locate
- Personal information of the deceased that will be needed by the family
- Funeral home service preparations
- Plans for the church or memorial service
- Participants and their roles
Free Preplanning Journal
In addition to using a pre-planning checklist, a pre-planning journal can provide your family with a precious keepsake. It is a personal space to share your life story, express your wishes as to how you’d like to be remembered, and a place to record other important information your family may need.
My father should be arriving within the next week. Although I don’t relish talking about his final wishes, I know it is necessary, as death is a natural part of life. By having these difficult conversations, we honor each other. I look forward to learning more about my father and what is important to him, and he will find comfort in knowing his wishes will be venerated. In the end, it will be a relief to know what his end-of-life expectations are without me second-guessing him after it is too late.
In a 2017 Consumer Awareness and Preferences Study by The National Funeral Directors Association, 62.5% of consumers felt it was important to discuss their funeral plans and wishes with family members prior to their own death, yet only 21.4% did so. I hope more of us will consider following through on these priceless conversations. While my father is here, he promised to help me with my own preplanning, and I’m looking forward to following through with it.
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