One of the largest costs that many people don’t anticipate when considering end-of-life costs is the cost of the funeral itself. Beyond leaving a sum to your family directly, there are several ways to pay for your funeral in advance: preneed funeral insurance, burial insurance, and life insurance. Preneed insurance is essentially prepaying your funeral. Burial insurance is a type of small life insurance policy meant to cover costs like burial and funeral home costs. Life insurance is a very large policy that can cover a whole host of things. To figure out whether prepaying your funeral is a savvy financial mood, keep reading below.
Preneed Funeral Insurance
Buying preneed funeral insurance is the equivalent of paying for your funeral in advance. Preneed insurance is not like normal insurance. Rather than approaching the insurance company with the best rate for you, you approach the funeral home that you would prefer and strike a deal with them. Based on their pricing, you pay for costs in advance. Some of these services are guaranteed while others are non guaranteed. Guaranteed services refer to services that you prepay for you whose cost will not rise with inflation. Nonguaranteed services mean that these services costs do rise with inflation. That means that even if you paid $1,000 for a certain service years ago, the insurance company could charge your loved ones for the cost with inflation and they would have to pay the difference for what your original preneed plan did not cover.
There are a number of cons associated with preneed plans. If you decide to move that area, your plan does not travel with you. Likewise, if that funeral home goes out of business, you will not receive your money back. Most plans are nonrefundable, so you will lose that money. Some preneed plans also have graded death benefits, similar to graded death benefits of burial insurance plans. In preneed plans, if you die within a certain period of time after purchasing the plan, you will not receive the death benefit.
Life Insurance
Most people have heard of life insurance plans. Life insurance is when you buy a plan from a private insurance company to cover your loved ones after you are gone. Life insurance plans can go from $50,000 to over one million dollars. Because the death benefit is so high, these premiums are sometimes out of reach for people. Additionally, many life insurance companies have fairly strict rules about which health conditions are disqualifying. For those who do qualify, their beneficiaries can use the benefit however they see fit after the policyholder passes away. Because the benefits are so much bigger, many people can easily pay for a funeral in addition to other necessary or unnecessary items.
Burial Insurance
Burial insurance is similar to life insurance but on a smaller scale. Burial insurance policies are worth $2,000 to $50,000. These policies are intended to cover funeral costs or other end-of-life costs. However, these plans are highly flexible, just like life insurance. People can use these funds however they see fit. Many people use them for bills, like unpaid loans, mortgages, medical debt, or funerals. However, families can also use them for less necessary items, like a vacation.
Because the death benefit is so much lower, burial insurance is much more affordable than life insurance. It is also more likely to take people with health conditions than life insurance.
Costs of a Funeral
Funerals can be quite expensive by the time miscellaneous costs are added together. The exact cost depends on the type of burial you have: burial vs. cremation. The National Funeral Directors Association breakdown the common funeral costs below.
Funeral with Burial:
- Non-Declinable basic services fee: $2,195
- Removal/transfer of remains to funeral home: $350
- Embalming: $750
- Other preparation of the body: $255
- Use of facilities for viewing: $425
- Use of facilities for funeral ceremony: $500
- Hearse: $340
- Service car/van: $150
- Printed materials: $175
- Metal burial casket: $2,500-$5000
Funeral with Cremation:
- Non-Declinable basic services fee: $2,195
- Removal/transfer of remains to the funeral home: 3$50
- Embalming: $750
- Other preparation of the body: $255
- Use of facilities for viewing: $425
- Use of facilities for the funeral ceremony: $500
- Hearse: $340
- Service car/van: $150
- Printed materials: $175
- Cremation fee if using a third party: $350
- Cremation casket: $1,200
- Cremation urn: $295
Without a cremation casket and urn, the total cost of a funeral with cremation is around $5,150. With the casket and urn, the cost is $6,645 on average.
Miscellaneous costs are more difficult to estimate. These include:
- Flowers: $500-$700
- Burial wreaths: $100-$200 each.
- Obituaries: $200-$500
- Grave Plot: $1,000-$4,000
- Opening and closing of grave: $1,000
- Monument/Marker: Upright: $2,000-$5,000 for an upright marker, $1,000 if lying flat
- Church Service Donation: $50-$200.
- Reception: $400-700 + food cost
Comparing All of Your Options
Overall, preneed insurance is not often considered to be the best option for most people. Depending on your budget, burial insurance or life insurance policies are the best options. With a burial or life insurance policy, families can use that money for whatever they need, including funerals. The plans are so much more flexible in comparison to the rigid confines of the preneed insurance plans.
Understanding which plan is better for you can take time. We at Senior Life Services can help you make sense of the confusion. Call (800) 548-3249 today.
