Who Should Have Funeral Insurance?

By James O'Neal

Funeral insurance manages to combine two things most people don’t like to think about: funerals and insurance. It also helps grieving families pay for an expensive and necessary event during a difficult time, and it gives policyholders the peace of mind that comes with knowing that their final needs will be covered without burdening their loved ones.

Funeral insurance may not be a fun topic, but it is an important one. To help you decide whether funeral insurance is right for you, here are the answers to some common questions you might have.

What’s the difference between life insurance and funeral insurance?

It’s easy to confuse funeral insurance and life insurance. Both of these products help families deal with the financial consequences of a death.

Life insurance comes in several varieties. Term life insurance provides coverage only for a predetermined period of time, such as 10 or 20 years.  Permanent life insurance does not expire in this way. It also accrues value that can be accessed during the policyholder’s life, making it a popular tool in retirement planning.

Life insurance can be used to cover a variety of expenses, including medical costs and other bills. It can also help survivors pay off mortgages or deal with the loss of the deceased’s income.

Funeral insurance, final expense insurance or burial insurance is intended to cover the costs associated with a funeral, although beneficiaries may have the option of using some of the funds for other expenses, such as medical bills, if needed.

Because funeral insurance is designed to cover the cost of the funeral and associated expenses, the coverage amount tends to be limited to around $10,000 to $25,000, although higher limits are possible.

How much do funerals cost?

Funerals are more expensive than many people realize. Because of this – and because people simply don’t like to think about funerals – many people fail to set aside appropriate funds for a funeral. As a result, when a death occurs, survivors have to deal with financial issues as well as emotional ones.

Although many factors impact the price, funerals typically cost several thousand dollars.

The average funeral could include the following expenses:

  • Basic services fee, which covers the costs associated with obtaining permits and death certificates and making other necessary arrangements
  • Preparation of the body, which may include embalming or cremation
  • Transportation of the body from one funeral home to another, or even from one state or country to another
  • The use of a hearse
  • The cemetery plot and the fee for its maintenance
  • A casket, a grave marker and a grave liner or burial vault for burial
  • An urn for cremation
  • Services for the friends and family of the deceased

According to the National Funeral Directors Association, the median cost for a funeral with viewing and burial was $7,360 in 2017. With a vault, the cost goes up to $8,755. Cremation tends to be somewhat less expensive. The median cost for a funeral with viewing and cremation was $6,260.

Keep in mind that this is the median cost, meaning that half of all funerals cost more. One important variable is the cost of the casket. While some basic models cost around $1,000, others cost as much as $10,000, and some cost even more.

What decisions go into funeral planning?

When planning a funeral, many decisions have to be made. For example, which is preferred –  cremation or burial? What type of casket or urn is preferred – a basic one or an expensive one? What kind of service or services – such as graveside or memorial –  should be arranged?

Although a person may not enjoy thinking about their own funeral, making these choices ahead of time can be easier than having to deal with them in a hurry while also grieving.

Many people have strong preferences based on their religious beliefs or other values, but they do not always make these preferences clear. If surviving loved ones are forced to make decisions without knowing what the deceased would have wanted, they may stress over each choice. In some cases, they may choose expensive and unnecessary options out of a sense of guilt, even if they cannot easily afford to do so.

By purchasing funeral insurance and planning the funeral, you can ensure that everything is arranged and paid for ahead of time, leaving less of a burden for your loved ones.

Could funeral insurance help your family? Learn more about funeral insurance and life insurance products.