The cost of an average funeral might surprise you. According to Parting, the average North American funeral costs between $7,000 and $10,000. This expense is often unexpected, and it can add stress to an already difficult time. Funeral insurance, also called burial insurance or pre-need life insurance, can alleviate this stress.
Policy Basics
Although funerals can be expensive, funeral insurance can be very affordable. According to the Insurance Information Institute, a typical burial insurance policy might only cost $2 to $3 per week. For that, the policyholder might get a policy worth $5,000 to $25,000.
How much coverage you can get and how much you’ll pay for it will depend on underwriting factors, including your age and health. The younger and healthier you are, the more coverage you’ll be able to secure at a low price. However, funeral insurance coverage is often purchased by older individuals who don’t need full life insurance policies but want to make sure their final expenses are covered.
Unlike what is seen with many other types of life insurance – which often include higher premiums and higher payouts – a medical exam likely won’t be necessary for funeral insurance. To complete an application and secure coverage, you’ll simply need to answer a few basic questions.
Funeral Insurance Arrangements
There is significant variation in how funeral insurance and pre-need arrangements are handled. Some people may use different terms – pre-need insurance, burial insurance and funeral insurance – when describing different arrangements.
In some cases, the insured may work with a funeral home to plan the funeral ahead of time and to make payment arrangements. Note that this could lead to complications if you decide you want to use another funeral home – for example, if you move to another state.
In other situations, the insured will work with an insurance agent, just as what happens with other types of life insurance. The named beneficiary will receive a payout to cover the costs of the funeral.
As with all types of life insurance, it’s important to select the beneficiary carefully. Talk to the beneficiary ahead of time to explain your plans. Although it can be a difficult subject to broach, going over your wishes now will make things easier when the time comes to plan the funeral. Let the beneficiary know what kind of service you want, whether you want to be buried or cremated, what type of casket you want and other important details.
Depending on your arrangements, you may need your insurance policy to be assignable. This will allow a funeral plan to be assigned benefits. However, it’s also important to discuss this with the funeral home, as some funeral homes require upfront payment.
By purchasing funeral insurance, you can ensure that funeral costs are covered. This is also an excellent opportunity to make your wishes known, so your loved ones won’t worry or argue about what you might have wanted.
Interested in learning more about your funeral insurance options? Contact PTT Financial.