Should I consider funeral insurance?

Funeral Planning
funeral insurance

Losing a loved one is a very difficult and painful time. Experiencing grief can bring a complex set of feelings. On top of that, funeral or cremation considerations often include complicated financial decisions. However, by paying for your funeral in advance, you have the chance to spare your family further stress down the line. Relieving your family, who will take care of your funeral arrangements, of financial burdens will give them the confidence of knowing how you want to be remembered. 

There are a number of ways to fund a funeral in advance — a prepaid funeral plan, funeral insurance and life insurance — so it can be a bit tricky when deciding what’s best for you and your family. Today, we’ll talk about pre-planned funeral insurance. 

First, let’s explore what prepaid funeral plans are, as well as the economics of funerals. By learning about this, we hope you will see that pre-planned funeral insurance will be worth it.

pre-plan funeral insurance

What are prepaid funeral plans?

So, what are prepaid funeral plans exactly? A prepaid funeral plan allows you to outline and coordinate your funeral or cremation in advance, and lets you to choose the products and services you would like to include. You can specify the details of the funeral arrangement, cremation or burial, among many other aspects of your final departure. After all of that is taken care of, you can then pay for the arrangements over time in installments that fit your budget. 

A typical plan lets you choose the following, and more: 

  • Location of funeral service and specific cemetery

  • Music and hymns 

  • Catering for the post-funeral reception 

  • Decor such as memorial wreaths and photo displays

  • Stationery and funeral guestbook 

  • Keepsakes 

  • Religious officials (if any). 

When you plan funeral details ahead of time, you gain peace of mind for yourself and your loved ones. Your family won't need to choose a funeral home, plan a service, or worry about how to pay for your funeral, cremation, memorial or celebration of life. 

What is the average cost of a funeral? 

The financial cost of a funeral can cause stress for your family, with the price range expected to stay between $9,600 to $13,000, on average, in the next few years. Often, services such as cremation are not included. Likewise, these figures don’t include cemetery fees. That’s why it would be a wise move to anticipate the financial impact of your funeral on your loved ones, and then plan accordingly. 

With a prepaid funeral plan, you get to choose the type of service you want and lock in the present-day prices, which protects you against rising costs and inflation. After you lay out the details of your chosen plan and sign a contract, the funeral home will establish an insurance policy or trust account (revocable or irrevocable) on your behalf. This secures your monthly payments. Just like any major purchase, your payments continue until the balance on your plan is paid off. Terms are usually three to 10 years, which allows you to have a monthly payment that works with your budget.

funeral insurance cost

What is funeral insurance?

Now that you know the background of funeral planning and the financial elements that it comes with, let’s talk about pre-planned funeral insurance.

Not many people want to think about the details of their funeral or cremation. It can be an uncomfortable and emotional subject. However, think about the financial hurdle your loved ones will have to overcome when the time comes. Remember, the point of funeral planning is just as much about helping them out as it is about you having control over your final departure. However, even though pre-planning a funeral is a progressive concept and is meant to be financially advantageous, life can always throw curveballs at you. That’s where funeral insurance, also called burial insurance, comes in. 

What is burial insurance? 

Burial insurance is another name for funeral insurance. It is also sometimes called final expense insurance. These policies work like regular life insurance in which you pay monthly premiums. When you pass on to the next life, your beneficiaries receive a payout designated for end-of-life expenses. 

However, unlike a traditional life insurance policy, which requires a medical exam to determine the cost of the policy, burial insurance doesn't require a health exam. In fact, applicants are often insured after answering only a few questions. 

There are two main types of burial insurance: 

Final expense insurance

This type of insurance pays a flat amount — usually around $5,000-$25,000, depending on the plan you select — to your chosen beneficiary, who uses the money to settle your final expenses. As long as you continue to pay the premiums, the insurance remains in effect until you die, when your beneficiary gets the benefit. The benefit can be used for funeral and burial costs, as well as medical bills, credit card debt and other expenses. The beneficiary decides how the money is spent, and there is no protection against inflation. Also, with this type of funeral insurance,  your family may have to pay the money for funeral expenses initially, and wait for the policy to pay them out later. 

Pre-need insurance

This type of insurance covers only the expenses associated with a pre-planned funeral, cremation or burial. The benefit is paid directly to the funeral home chosen by the policyholder. This insurance does protect against inflation, because funeral costs are locked in at current prices. Pre-need insurance premiums are paid only for a set amount of time. 

Looking ahead

Pre-planning a funeral can be a tough thing to do, especially since we have to face our own mortality while we're still alive and well. However, as you’ve learned from our journey today, preparing for the future is one of the selfless and thoughtful things you can do for your loved ones. Remember to always look ahead, no matter where you are in life. 

One of the most important steps in pre-planning your funeral is to choose the right funeral director. Check out our guide on finding trusted funeral directors to help you get started.

And if you would like to build a living timeline that will live on after your passing, you can do that right here with Memories.