Final Expense Insurance
Final expense insurance is designed to cover the bills that your loved ones will face after your death. These costs will include medical bills and funeral expenses. Final expense insurance is also known as burial insurance. Unfortunately, even bare-bones funerals can cost thousands of dollars. The ins and outs of funeral costs can be tricky.
Here is what you need to know about the options for dealing with final expenses including a final expense insurance policy.
Pre-Payment
You can choose to pre-pay for your funeral. This approach does have its pros and cons. When you pre-pay for your funeral, you get to personalize it. You can grill different funeral directors until you find one you love. You can pick out the perfect casket and the choicest plot in the cemetery. Plus, pre-paying will more likely prompt you to talk to your loved ones about your choices. This may give both parties more peace of mind.
States have varying guidelines on funeral pre-payment. These guidelines work to prevent you from paying unscrupulous people who can take your money and run. It helps protect you or your family from overpaying on top of what you pre-pay. Before you pre-pay, check your state guidelines for how the money will be held until your death.
Make sure you know what you are paying for. Also check whether you get to lock in the rate for your funeral. That way your family will not be surprised by an up-charge later. When pre-planning or making any pre-payments, be sure to keep documentation. That way you and your loved ones will have records of what you want and what you did.
The disadvantage of pre-payment is that it is less flexible than burial insurance. If your funeral plans change or you move, you and your family may not get that money back. Even worse, the funeral parlor could go out of business and you may lose that money entirely. Final expense insurance provides your surviving relatives with a payout they can spend anywhere. You have less control, but your family has more flexibility
What Happens If I Don’t Have Coverage?
If no prior arrangements are made the cost of your funeral at your passing falls to your family. According to NJ State Funeral Directors Association (NJSFDA) A typical funeral that includes a 1-day visitation, embalming, committal and church services, local transfer, transportation, casket and other burial cost is an average cost of $17,128. Do not forget whether you may want a catered meal after the service. Or perhaps a trip abroad to scatter your loved one’s ashes. Additionally, it is probably best not to count on the lump sum death benefit from Social Security to pick up the slack, that is only $255. This all can cause an undeniable strain on the finances of your family already saddened with your loss
A final expense life insurance policy isn’t the same as what’s known as “insuring your life.” Insuring your life concerns leaving your family and loved ones with enough support after you pass away. Term and permanent life insurance value your policy as proportionate to your earning power now and for the rest of your expected life span. With funeral insurance, the value of your policy is proportionate to the expense of your desired funeral. While other forms of life insurance can top a million dollars, it is rare for final expense insurance policies to get above $20,000.
The exact cost of your final expense insurance will depend on your age. Unfortunately, the older you are, the larger the premiums. This is because insurance companies take on more risk when insuring older folks, given the fact that they’re statistically closer to death. If you buy final expense insurance when you are 45, you’ll pay less each month than if you wait to purchase until you’re 75.
If you want to leave a clear indication of your wishes without necessarily locking in the funeral home, you could always combine burial insurance with a document stating your preferences. Kept wherever you keep your will (you have a will, right?), this document would cover issues like burial vs. cremation, open vs. closed casket. etc.
Whether you choose a life insurance policy that covers funeral expenses and then some, a dedicated final expense insurance policy, or funeral pre-payment, you’ll be doing your loved ones a huge favor. Taking the time to consider and document your end-of-life wishes may be a little uncomfortable now, but it will make all the difference when the time comes.
If you are having a hard time figuring it out on your own, consider turning to BEW Financial Solutions. As we review your concerns and needs, we are able to help you with all your retirement and estate planning.
BEW: The Right Fit
Since insurance is such an important part of our life planning you should speak to someone who knows the information you need to know. You need to talk to someone who understands how important this is to you and your family. You need someone who can treat you like family.
Knowledge and compassion fit are what BEW is about. We have been in the business for over twenty years. We are a local small business that has been a part of our community for many years. We have raised a family and helped many local families as well. We love to educate our clients about the different aspects of insurance and find what is best for them. We want you to understand and are always here to help.
