Funeral insurance: Finding your final policy
Death is inevitable – and expensive. There are several options for making sure loved ones aren’t on the hook for your funeral expenses.
Life insurance can be a difficult conversation. It’s even harder sometimes to talk about final expense.
People don’t want to leave their loved ones with debts, but still thinking about your own mortality isn’t a joyous topic.
However, final expense can be costly. Final expense often cost between $7,000 and $12,000 — not including cemetery costs.
There are several options for funding final expenses. But before you choose one, take a look at the big picture so you understand the costs and what is covered.
What is Final Expense Insurance?
Final Expense insurance is a bit of a misnomer. You can’t buy an insurance policy that will cover every conceivable cost related to your death.
The terms “final expense insurance” generally refer to small life insurance policies marketed to people who want to leave a little money behind for their families to cover final expenses.
Most big insurance companies don’t offer a life insurance policy that simply provides a few thousand dollars to pay for your funeral. The largest insurers typically offer permanent life insurance policies starting at $25,000.
You can often find final expense insurance policies of between $5,000 and $25,000. You can decide to pay premiums weekly or monthly. These policies often cost less than other life insurance policies, but your loved ones also get a much smaller death benefit.
Pre-need insurance
Pre-need insurance is another type of policy you can buy to cover some of your funeral expenses. Funeral homes offer these policies. With a pre-need policy, you choose the services you want for your funeral and buy a policy to cover the cost.
The funeral director will provide a list for goods and services. The Federal Trade Commission requires this under the “Funeral Rule.”
Many funeral homes have licensed life insurance agents on staff who sell pre-need policies. In some states, you name the funeral home director as the beneficiary, so the proceeds go directly to the provider to carry out the funeral according to your plans.
Other states don’t allow you to name the funeral home as the beneficiary, so you have to name someone you trust to carry out your wishes.
Many funeral homes guarantee the prices of the items you choose, such as fees for overhead, transferring, embalming, hearse and other basics, says H.W. “Skipper” Ragsdale III, a fourth-generation funeral professional and a licensed life insurance agent in San Diego. With a guaranteed pre-need policy, you don’t have to worry about prices escalating and exceeding the death benefit.
Great plan