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How Are You Going to Pay for Your Funeral One Day?

It’s easy to put off thinking about paying for something that seems so far in the future. After all, there always seem to be competing needs– perhaps retirement funds, college tuition, home renovation, or paying off debt.

But thinking ahead about how you’re going to pay for your funeral one day can be a smart investment. Chances are you aren’t quite sure how much it will cost, and you aren’t quite sure how it will be paid for. Let’s review your options – both traditional and non-traditional – and answer some of your questions.


How to pay for a funeral


Government benefits

The federal government pays a lump sum of $255 to either the qualifying spouse or the qualifying surviving child of the person who has died. That’s not much money considering estimates of funeral costs easily range between $6,000-$10,000 and above, according to the National Funeral Directors Association.


Savings account

This is an easy way to pay for a funeral, but it requires discipline to consistently save the amount of money and leave it alone once it’s there. Remember, interest rates on a basic savings account are nearly nonexistent, so you can’t plan on the account growing very quickly.

If your target is to save $10,000, you would need to put away $50 a month for 200 months (about 16½ years), or $100 a month for 100 months (about 8¼ years), or $200 a month for 50 months (just over four years). If you want to build your savings faster, adding things like tax refunds or work bonuses can cut the time involved considerably.


Term life insurance

Term life insurance policies’ primary purpose is to replace a person’s salary in the event of his or her death, especially when raising children, buying a home, and saving for college and retirement. Unlike whole life insurance, they do not accrue any cash value. When the term expires, so does the death benefit. So, if you outlive your term life insurance policy, you must decide whether to purchase a new policy or go without the insurance.

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Military death benefits

If the person who died was a veteran, either active or retired, the surviving family members are entitled to a range of benefits. Keep in mind there are different guidelines on who is eligible for which benefits.

All military veterans are entitled to a free burial in a national cemetery and a grave marker. Spouses and dependent children of veterans are also entitled to a plot and marker in a national cemetery.

For more information, you can visit the National Cemetery Administration or call the regional VA office in your area by dialing 1-800-827-1000.


Pre-need funeral plans

In pre-need funeral plans, you plan for the funeral you desire with a specific funeral home and then pay for those arrangements ahead of time, either all at once or over time. The positive aspect of these plans is that your family doesn’t have to manage the decisions or expenses when you die.

The possible negative aspects are that over time, a funeral could end up costing more than you paid, and the family will have to make up the difference. Also, funeral homes may change ownership, be bought by a corporation, or go out of business. The safest route is to go with an independently owned, longtime funeral home with a local track record.


Employee life insurance

Many companies allow you to purchase life insurance at a substantially lower rate while you are working for them. If you pass while employed with that company, your death benefit can be used to pay for funeral expenses. However, when you leave that company, the benefit goes away.


Payable-on-death (POD) account

Also called a Totten Trust, this option allows any person to set up a POD account at a bank, naming the beneficiary of his or her choice. While the account holder is alive, the account accrues interest and the funds are available for withdrawal if desired.

When the account holder dies, the beneficiary simply goes to the financial institution and receives the funds. It’s an easy way to transfer funds to your family beneficiary without the account having to go through probate. As with a regular savings account, however, this method of paying for a funeral requires enough discipline to keep enough money in the account to pay funeral expenses if you die.


Fundraisers and Go Fund Me

In some cases, families or friends sponsor fundraisers to help raise the money needed for a funeral. They may have musical acts performing for free and donated food and drink to maximize attendees’ donations.

Online, Go Fund Me is a popular tool for those who need to raise money. By setting up a page on the website and paying tribute to the person who has died, many families raise enough money to cover medical expenses in addition to funeral costs.


Family and/or friends

In cases where there is no insurance policy or other death benefit, the costs of a funeral are usually left for the family to pay. In addition to possibly being a financial hardship, this means that grieving family members must make all the funeral or memorial service arrangements. During such an emotional time, it can be harder to separate the budget from how you felt about a person, even if you know that spending more does not mean you loved the person more.


Final expense life insurance

Final expense policies usually cost less than typical life insurance policies and are specifically meant to cover the costs of funeral services and other end-of-life expenses. The policies usually pay a death benefit between $10,000-$25,000. Unlike pre-paid plans at funeral homes, final expense insurance has no restrictions on how the money must be used.


Learn more about final expense policies

How Are You Going to Pay for Your Funeral One DayAn increasing number of people are interested in final expense life insurance – also called “burial insurance” or “funeral insurance” – because of its affordability and focus on helping with funeral costs. If you’re like most people, you don’t want to leave your loved ones with the high cost of funeral arrangements and other end-of-life expenses.

But not all final expense policies are the same. For example, most will provide a death benefit to your beneficiary, but that’s often the extent of their service. Most final expense insurance companies don’t help surviving loved ones price shop funeral items or call local funeral homes for pricing information.

Just because your family has received the money to cover your funeral doesn’t mean they know where to start. Who should they call first? What documents do they need? What funeral home should they use?

That’s where Funeral Advantage™ can help. We’ve spent the last 50 years helping families just like yours navigate the ever-changing funeral industry. Last year alone we saved policyholder families thousands of dollars on funeral costs. We take pride in giving your family more than just a check; we give them peace of mind because we’ll be there to help every step of the way.

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