Funerals can be expensive. The cost of the average funeral is around $6,000, but when considering such amenities as flowers and limousine service, it can exceed $10,000. These costs may not include the cemetery plot and grave marker. One way to help control the cost of a funeral and in the process ease the burden on surviving family members is by purchasing funeral insurance.
There are different types of funeral insurance. Most insurance companies in the United States do not provide policies dedicated exclusively to covering the cost of funerals, but some foreign companies like Apia Insurance do offer funeral insurance if you live overseas. For most companies, a regular life insurance policy naming a family member as a beneficiary may provide sufficient funds for this purpose. The family should know beforehand the amount that will be needed to cover the costs that are anticipated.
Some companies that offer guaranteed-acceptance life insurance policies may provide plans that specifically cover funeral expenses. These policies are normally marketed to seniors who have not made funeral arrangements. Such plans are normally purchased on a term basis, with the shortest period usually five years. However, full coverage is available on the first day. A medical examination will not be required, although the purchaser may be asked a few health questions. In some cases, life insurance policies can be purchased that name a funeral home or its director as a beneficiary. In such an arrangement, the amount set aside to pay for the funeral goes to that organization or individual.
A funeral trust account is a type of “preneed” insurance, although it is normally referred to as merely a funeral plan. It can be arranged with a bank or directly with a funeral home. It is purchased beforehand, with a stipulation as to how the funds will be used. Since it may be obtained years or even decades before it is needed, this type of plan can offer a tremendous savings to those purchasing it and their families. This also gives one an opportunity to select the design of the grave marker, the type of service planned and related amenities, and whether there will be a conventional burial or whether the person desires to be cremated. However, the plan may require modification if there are changes in one’s family status or place of residence.
There are different ways of paying for funeral insurance. A single-premium plan is purchased in a lump sum and will offer immediate coverage. Graded policies are paid for over a period of time, with coverage increasing commensurate with the number of payments made. Full benefits will usually become available after a period of five years.
Those contemplating the purchase of funeral insurance should consider the dollar value of their life insurance policies and any other personal assets that can be used to cover funeral costs. These may make the purchase of funeral insurance unnecessary. Such issues need to be worked out beforehand so it will allow the dearly departed to literally rest in peace.