Why Every American Family Needs Funeral Insurance
Funeral insurance- sometimes referred to as burial insurance or final expense insurance, helps to cover the costs that are associated with your funeral, burial, or cremation. These days, funerals can cost thousands of dollars, and often times, most families are unprepared for an expense of that size. However, having funeral insurance can help cover all the costs associated with the burial. Here’s everything you need to know about funeral insurance.
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What are the Types of Funeral Insurance?
When it comes to funeral insurance, there is no “standard” policy. A funeral insurance policy is used to describe any contract or insurance policy that pays out when somebody passes. The amount of funeral insurance coverage you purchase depends on how much you want the final expenses of a person to be.
There are two common types of funeral insurance policies. Having any of the two policies can help ensure that your family does not face a burden when it comes to covering final expenses. However, it is important to note that there are key differences between the two. Before you decide to purchase a policy, here is how the two types of coverage work.
Burial Insurance is one of the two forms of funeral insurance designed to cover the costs of your burial when you pass. (1) Since most families do not realize a funeral may cost thousands, many fail to plan ahead. This can leave your family in a significant amount of debt after your passing.
After you die, your burial insurance policy will pay the benefit directly to the beneficiary.
With standard burial insurance, the beneficiary is usually a spouse, child, or family member. (1) The beneficiary is entitled to use the money in any manner they see fit. Typically, the amount of funds received from burial insurance is low and can range anywhere from $5,000 to $25,000 depending on the coverage you purchased. Some insurance providers will also have policies that can issue more than $25,000.
A burial insurance policy also allows you to freely use any leftover funds after funeral costs. Many families find themselves using the leftover funds to cover final medical expenses, legal costs, or to pay off debts.
Preneed Funeral Insurance
Just like Burial Insurance, Preneed Funeral Insurance is designed to provide funds for your funeral far before the need comes. This policy can also help cover the costs of expenses such as standard funeral home services, merchandise, and any religious services. With some policy providers, you can help protect yourself against the rising costs of a funeral by locking in prices in today’s terms for standard services and materials.
However, the key difference between burial insurance and preneed funeral insurance is the payout. (1) Unlike a standard burial insurance policy, a preneed funeral insurance policy will directly pay the funeral service provider you choose to work with. Upon a person’s passing, the insurance provider makes the payout almost immediately to the assigned party (your funeral home) to assist in covering the expenses with a minimal time delay.
How Much do Funerals Cost?
Many people purchase a funeral insurance policy as a way to ensure that every aspect of their funeral is arranged far in advance so that no financial burden is left upon the families. According to the National Funeral Directors Association, the average cost of a funeral now exceeds $8,500. (2)
Since the 1980s, funeral costs have slowly been rising. It is not uncommon for a basic funeral service to cost $9,000 or more. Caskets alone can cost thousands of dollars themselves. Thankfully, there are a few places you can cut expenses, such as the extravagance of the casket or what is offered at the ceremony for attendees. However, some basic funeral services such as the cost of religious services cannot be avoided.
Funeral homes also have various fees they must change. For instance, most carry a basic service fee which can range anywhere from $1,500 to $2,500. This includes the securing of permits, overhead costs, arranging of the plans, and transportation of the body. (3) Headstones can also be a significant expense and can range from a couple of hundred dollars to thousands.
In order to avoid leaving your loved ones behind with a great financial burden, funeral insurance is a must. With funeral costs rising each and every day, it is important that families stay vigilant when it comes to searching for the right insurance policy. Start your search now to find the funeral insurance policy that best fits your needs.
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