According to Lincoln Heritage, funerals can cost an average of $7,000 to $9,000. This price includes items such as a casket, embalming, viewing, burial, and funeral home transportation. These prices do not include the fees associated with the cemetery, flowers, or a grave marker. When considering a life insurance plan, you plan to provide for your loved ones in the event of your death. Furthermore, you may also want to ensure your family does not suffer financially from funeral costs. Here are three options to consider when choosing life insurance with funeral costs in mind.
3. Burial Life Insurance
One option for covering funeral expenses is to consider purchasing burial life insurance. When you buy this insurance, you designate a beneficiary who will then use the payout to cover the costs of your funeral home and burial. The only expenses paid out by this plan are those associated with the funeral home, cemetery, and burial. These plans typically pay out between $5,000 and $25,000 for burial or cremation expenses. Mutual of Omaha offers whole life insurance combined with funeral planning services. Avoid choosing graded premium whole life plans as these plans start with low premiums that may quickly skyrocket to unaffordable levels.
2. Final Expense Insurance
Final expense insurance is similar to burial life insurance in that it pays for funeral and burial expenses. However, unlike burial life insurance, final expense insurance also pays for other outstanding debts owed by the deceased. For example, State Farm offers final expense insurance, which pays out $10,000 upon the death of the policyholder. Upon your death, your beneficiary can use the $10,000 to pay for any funeral, burial, or cremation costs. Your beneficiary is also free to use the funds for other expenses, such as outstanding medical bills.
1. Preneed Funeral Contract
To implement a preneed funeral contract, you would choose a funeral home and pay in advance for the services you would like them to provide. A guaranteed service plan means that even if the funeral home raises its prices before the time of your death, you will not pay extra. Meanwhile, if you pay for non-guaranteed services, your family members may need to make up the price difference if prices change over the years. There is risk associated with this plan. If the funeral home goes out of business before you require their services, your investment may be lost.