When researching what is best for your legacy and family once you pass away this is a very important topic of discussion.

Many Policies are meant to give someone who is on a low or fixed income peace of mind so they can leave a small lump sum of money to their children, grandchildren, loved ones, or leave money to a charitable cause. What makes this product so straightforward and simple is that the prices are locked in for your whole life and the coverage amount is also locked in. This allows you to be confident in what you’re paying into each month and that the policy will be there for your family whenever it is needed.

Is Funeral Insurance A Good Idea?

It depends. Helpful, right? Let’s dig a little deeper to see what you should consider when making sure a policy would be a good idea for you.

As long as you pay the policy each month the policy will stay active and payout to your beneficiary when the time comes.

The average costs for a traditional service range from $8,000-$12,000.

When you are determining the best policy for yourself, a parent, grandparent, or loved one the amount of coverage needed is an important step.

If you need $100,000 of coverage and are 70 years old and want a permanent policy where the premiums never rise and the coverage never decreases you will need to be prepared to have a very large budget. But if you are looking for a product that has the same features but is meant to just cover your end-of-life expenses, let’s say $13,000 and are looking to pay $50-$100 per month this is much more realistic for pricing and coverage.

So setting this expectation is an important first step.

7 Trustworthy Questions

Determine the cost

Do you want a traditional service with a viewing? Do you want to be cremated and have your ashes scattered at your favorite family vacation spot? Somewhere in between? Haven’t even begun to think about this yet? That’s ok, no time like the present!

Depending on your final wishes the cost can drastically vary from one selection to the next.

It is a good idea to be proactive in determining these costs and it plays a vital role in determining this product is worth the cost. This will help you determine how much coverage you will need.

How much coverage do you need?

The cost varies depending on how you wish for your remains to be handled once you pass and the area in which you live or will have the services.

Let’s say for an example that you wish to be cremated and have your children scatter your ashes at a favorite and meaningful place. And to honor the beautiful life you lived you would like to have a celebration of life with your closest friends and family. You will want to know the average cremation cost in your area, nationally this cost ranges from $1,500 to $4,000. A catered event can range from $25 to $100+ per person. How many people would you estimate? Let’s assume 50 people at $70 per person for food and beverage plus $4,000 for cremation. That’s $7,500 before considering other hidden costs.

Another thing to consider…What if you pass away in Washington but wish to be buried in Oregon where you spent most of your life, this is going to add the additional cost of transportation.
It’s better to round up and add a little cushion to your coverage due to the potential of unforeseen costs and inflation. Your family will thank you!

What can you qualify for?

When qualifying several key factors come into play.

• Age
• Current Health
• Medical History
• Prescription Medication
• Coverage Amount
• Policy Type

Age and overall health are the big deciding factors in determining what type of plan you will be able to qualify for.

How much will this amount of coverage cost you each month?

Super important question but it is highly dependent on the items listed above.
Visit our “Get Started” page or fill out the information on this page to receive a free quote to see the cost range that you would be in.

An example: A policy for $15,000 of coverage a 65-year-old woman can expect to pay anywhere from just shy of $60 a month up to over $90 a month, this is all dependent strictly on health.

An independent agent can assist you in shopping around to get you the best coverage given your specific health concerns.

This is what Willamette Life specializes in. In fact, it is all we do!

If you were going to put the same amount of money aside each month, how long would it take you to save?

It can be a bit complex but it is important to understand which type of policy is right for you and if it would benefit you to have this policy in the long term.

Let say in keeping with the example above the 65-year-old woman looking for $15,000 of coverage is in great health and qualifies for a plan that is $60 a month.

$60 per month X 12 months = $720 per year
In this example, it would take over 20 years for her to save the $15,000 on her own.

Given that the average life expectancy for a woman in the US is about 81 years. Assuming this woman will live to this average age of 81, it would absolutely be a good idea for her to take out a policy as she would have only saved $11,520 in this given time frame. If she had taken out this policy at age 65 her beneficiary would still receive the whole $15,000 policy amount regardless.

It is important that you do the math and take into consideration what your family history is and how healthy of a lifestyle you live.

Is it worth the risk of living past this age and the potential of “overpaying” the company rather than saving additional funds on your own?

Are you regimented and disciplined when it comes to saving? Yea, me neither!

This is one major positive when it comes to obtaining a policy, most companies require an automatic bank draft. This is a huge benefit because it makes it so you do not even have to think about it. Your money is basically being automatically saved for you. You are even able to pick the day of the month that you want your money to get sent to the carrier. This is especially helpful if you are on social security and only get paid once a month. Some companies even have social security billing which will allow your bank draft to be on the second Wednesday of each month, for example.

Funeral Insurance is designed to give you peace of mind knowing that you will be covered as long as you make the easy, low-cost monthly payment.

In my opinion, peace of mind is always a good idea!

When is it not a good idea?

If you are someone that is good at saving your money then doing the math is vital!

As you read in the above example, taking out a policy would totally be a good idea. However, there are certainly times when it might not be a good idea but then again, no one knows exactly when their time on earth is going to come to an end so the option of saving may not provide that peace of mind that your family will not be burdened by associated death costs.

This product is also not a good idea if you are looking for short term coverage. Term would be a better option for you, it would be more cost-effective in the short term. to be clear, any type of life insurance can pay for the funeral but not all will last until your passing.

But if you want a product that will be there when you need it and know that prices and coverage amounts will never fluctuate, then it is a great idea!

Now, let’s step back and dig a little deeper into those four types of policies available.

4 Types Of Policies

THE LEVEL PLAN

Qualifying for the level plan means you are in great health and answer favorably to all the health questions during the phone interview. The death benefits are applied on the first day of the policy. Depending on the carrier, Level is also known as Preferred to describe their top product. Traditionally Level-Benefit has the most economical premiums and optional add-ons known as “riders” to the policy. The best thing about this product is that it has the most flexibility in terms of policy limits and issue age. Unlike Graded, Modified, or Guaranteed Issue Plans, Level Plans are typically for clients who are in good or excellent health.

• Benefit for Accidental Death: No waiting period, full death benefit
• Benefit for Non-Accidental Death: No waiting period, full death benefit
• Underwriting: Simplified issue underwriting

This product will be the best priced and immediate death benefits are available.

THE GRADED PLAN

Every Graded plan has its own rules and guidelines. This type of plan has partial waiting periods that vary from company to company. This will typically be for people with specific health conditions that are classified as higher risk. The waiting period is typically two years and pays a percentage of the death benefit that increases each year. Some carriers do not pay the full death benefit out until the fourth year. This product is generally for clients with past health concerns or has a specific health issue that is chronic or recent.

• Benefit for Accidental Death: No waiting period, full death benefit
• Benefit for Non-Accidental Death: Waiting period, death benefit is equal to a percentage of the death benefit
• Underwriting: Simplified issue underwriting

This product will be at a midpoint price and there will be a waiting period on non-accidental death benefits.

THE MODIFIED PLAN

Modified Policies are very similar to Graded Policies, but there are a few very distinct differences. Just like Graded Plans, Modified Policies dive into your health conditions and place you in a more restrictive plan, this may include recent stroke, cancer, alcoholism, etc.

• Benefit for Accidental Death: No waiting period, full death benefit
• Benefit for Non-Accidental Death: Waiting period, death benefit is equal to return of premium + an interest percentage declared at policy issue
• Underwriting: Simplified issue underwriting

For this policy, the carrier will return the paid premiums, plus 10 percent interest on those premiums if a non-accidental death occurs before two years. For a Non-accidental death, 100 percent of the death benefit will be awarded if the death occurred in year three or later depending on the carrier.

THE GUARANTEED ISSUE PLAN

Guaranteed Issue Policies are known to have the highest premium payments. The great news about this product is just like its name, you are guaranteed to be approved. The carrier will reduce the policy limit and place certain age restrictions on the application. Predominantly Guaranteed Issue Policies do not come with additional add-on options. This product is typically reserved for clients with severe health issues.

• Benefit for Accidental Death: Guaranteed approval, no waiting period, full death benefit
• Benefit for Non-Accidental Death: Waiting period, death benefit is equal to return of premium interest rate for a specified number of years
• Underwriting: No Underwriting

If a death happens within the first two years carriers will offer the return of premium plus a predetermined interest rate.

Term buyer beware

Typically you will be able to find a less expensive product then the four products listed above. This cheaper product would be term.

If someone is selling you a product that sounds too good to be true…. “20,000 of coverage for $9.99 per month” there is most likely a catch. These policy premiums typically go up the older you get and the coverage amount typically goes down the older you get. Then at a certain age, it terminates altogether. The only reason this makes sense is if you need short term coverage.
Do not use this as your long haul game plan.

Call us at 833-518-0080

Final Thoughts

a. Find an independent agent to assist. As you can see this is not a one size fits all type of situation. By finding an independent agent who will be able to check multiple carriers on your behalf you can save time and money.

b.Do the math for yourself. Or give us a call and we can help see what you qualify for, what your monthly premiums will be and help you do the math to see if a policy is a good idea for you. As stated earlier the average costs for a traditional service in the US range from $8,000-$12,000.

c. There are no guarantees in life. You know your family history and your will to live better than any company. Carriers play the odds or law of large numbers to determine the price given your age and health. The law of large numbers is, in short, the theory that when looking at a larger group of people the actual result is closer to the expected result. Basically that they are playing the odds given health, monthly premiums, and overall life expectancy of everyone they insure. Is funeral insurance a good idea? For most, it absolutely is.

Jake Irving

I’m the owner and founder of Willamette Life Insurance. Willamette Life specializes in Final Expense Insurance. We compare prices with different insurance carriers while finding the perfect match for your health and budget. This company was started to help educate the public on why Final Expense Insurance could be a great option for them and their family. We strive to be friendly, informative, and always have the client’s best interest as our top priority. Everything in this article is my own professional opinion and experiences I have had during my time in helping clients.