There are many options available to cover expenses that are accumulated upon someone passing away.
One of the biggest things that will help family members during this time is a plan in place for funeral arrangements and other final expenses.
This is something that needs to be taken care of beforehand. Then you can go about living your best life with peace of mind.
Insurance To Cover Funeral Expenses
There are several types of life insurance plans available. The key is to determine which is best given your specific situation.
Most insurance can cover funeral expenses from term life to whole life unless there are specific indications that say otherwise.
Funeral Expense Insurance might be the best fit if:
- You do not have existing life insurance
- You do not have money set aside to cover funeral expenses
- You would like an insurance policy specifically for funeral arrangements
- You do not want to leave a financial burden for loved ones to bear
The Function Of Funeral Insurance
Funeral insurance is a type of whole life insurance that is intended to pay for funeral expenses. These policies were created specifically for seniors as an affordable way to cover the costs of a funeral.
Whole life insurance is permanent and thus never expires. This type of insurance has three main features that separate it from a term life or universal life insurance plan.
Whole Life Features
Price Lock: The price you are quoted and approved with will never change. There are no pricing games with whole life coverage. The initial price you pay will carry through to your very last premium.
Coverage Lock: The amount of coverage taken out will always remain the same. Having no fluctuation in the death benefit is vital, so you can rest assured that your family will be financially protected after you’re gone.
Builds Cash Value: The policy builds a cash value over time that you have the opportunity to borrow against. This is like a built-in loan option should you ever need it.
Specific Funeral Insurance Features
In addition to the standard whole life features of a price lock, coverage lock, and cash value, there are 2 more benefits incorporated with each funeral insurance plan.
No Medical Exams: The proposed insured will not be asked to get a medical exam of any sort during the application process. Answering favorably to a few health questions is all that is necessary for an attempt to qualify for coverage with no waiting period.
Affordable Coverage: This plan has a smaller death benefit, making the average cost of coverage much more affordable. Like most consumer products, the more you get, the more you pay. Funeral insurance policy amounts range from $2,000 – $40,000, with the average death benefit being in the $10,000 range.
There is a qualifying process for seniors to go through that determines which insurance coverage they can receive. There are 4 total tiers within funeral expense coverage.
Level: This is the premier option with no waiting period and the lowest premiums. To qualify for this coverage, you must be in good to great health. This is determined by answering favorably to the health questions that are in the application.
Graded: You must also answer health questions for this coverage option. However, there is a waiting period, and the rates are slightly higher.
Modified: This policy is similar to the graded tier but has a less favorable waiting period and higher premiums. We generally advise against modified plans.
Guaranteed Issue: As it sounds, this plan is guaranteed to issue an insurance policy to all that apply. These plans should only be considered for people who have an advanced diagnosis that is chronic or terminal. There will be a waiting period assessed along with high premiums.
Funeral Insurance Pricing
Funeral expense coverage ranges in price, with the average cost for seniors being $50 – $90 a month. However, the cost that someone pays will vary depending on which plan they can qualify for.
Insurance companies each set their own pricing and qualifying guidelines.
How the Cost is Calculated
The price is determined based on the four main pillars of health, age, gender, and policy amount.
Health: The healthier someone is, the more desirable of a plan they can qualify for, meaning lower premiums with no waiting period. Level coverage is the least costly. Guaranteed acceptance plans are usually the most expensive.
Age: The older someone is when initially taking out insurance coverage, the higher the premiums will be. As noted, the price will remain the same throughout the insured’s life, but this is only in effect after the insurance policy has been issued.
Gender: Females pay less than males for the same exact coverage. This is mostly because men statistically do not live as long, so they will not be paying the premiums for as long as women.
Policy Amount: The more coverage you have, the higher the monthly cost will be. It could be worth it to take out more coverage as the average funeral costs are rising.
As illustrated in the price charts below, pricing varies by age, gender, and policy amount. The individual insurance companies determine the health aspect of the price. It will be towards the lower end of the price range that you should expect to pay for someone with no health concerns.
Monthly Premium Range
|45||$23 – $34||$32 – $49||$42 – $64|
|50||$24 – $39||$35 – $57||$45 – $80|
|55||$28 – $47||$40 – $69||$52 – $103|
|60||$33 – $54||$48 – $80||$63 – $119|
|65||$41 – $66||$60 – $99||$79 – $146|
|70||$53 – $80||$78 – $120||$103 – $177|
|75||$72 – $116||$107 – $173||$142 – $254|
|80||$98 – $190||$146 – $283||$194 – $411|
|85||$136 – $220||$202 – $328||$269 – $436|
Monthly Premium Range
|45||$27 – $47||$39 – $68||$51 – $89|
|50||$31 – $56||$44 – $83||$58 – $110|
|55||$36 – $61||$52 – $91||$69 – $135|
|60||$44 – $68||$64 – $101||$84 – $149|
|65||$56 – $91||$83 – $135||$110 – $199|
|70||$75 – $106||$110 – $158||$146 – $233|
|75||$100 – $150||$148 – $223||$197 – $328|
|80||$140 – $232||$208 – $346||$276 – $461|
|85||$193 – $312||$288 – $467||$382 – $621|
Funeral Insurance Covers Anything
One of the best funeral insurance advantages is that it quickly provides a flexible death benefit, meaning that the money can be spent on anything.
With the average funeral costs rising across the nation, having a plan to cover these expenses is more important than ever.
Some of the most common items that the death benefit is spent on are listed below, with details about what each might entail.
The traditional average funeral cost in the United States is $7,643, not including a headstone or cemetery plot. Keep in mind this is just the cost associated with the funeral home and does not include a celebration of life or other memorials.
Included in the price estimate:
- Basic Service
- Transfer of Remains
- Casket ($2,500)
- Outer Container ($1,000)
- Dressing and Casketing ($125)
While cremation is commonly viewed as the less expensive option, in the US, the average cremation cost is $6,280 but varies by state and city. There is more involved in the creation process than one might initially think.
Included in the price estimate:
- Basic Service
- Transfer of Remains
- Memorial Service
- Memorial Program ($175)
- Other Preparation of Body ($255)
- Embalming ($750)
- Cremation Casket ($1,200)
- Crematory Fees ($300)
- Urn ($295)
Not included in the price estimate:
- Cost of Headstone, Monument, or Marker
- Cemetery Property, Plot of Land, Columbarium, etc.
Memorial / Celebration of Life
It is very common to have a memorial or celebration of life to honor the recently departed. While none of the items listed below are required, it is common to include at least a few.
- Event Space
- Food and Beverage
Health insurance could cover expenses from medical procedures or hospital stays that occurred leading up to the time of death. However, this is not always the case, and it depends on the health insurance that is held at the time. If it’s not covered, these medical bills could fall to the next of kin.
This coverage can help pay for medical bills that health insurance may not.
Post Mortem Expenses
An autopsy is not generally performed unless there is foul play suspected or the family would like it for the purpose of genetic knowledge. This is usually an out-of-pocket expense expected to be covered by the family as health insurance does not cover it.
In addition to medical, there could be other outstanding bills that need to be addressed. This financial protection can help cover the cost of a mortgage, car, phone, utilities, etc., in this time of need.
The legal process of executing a will is done through probate. This is done through the city or county probate courts to ensure the debts of the deceased are paid. The remaining assets are then given to the beneficiary.
Having the proper end-of-life documents will help make this process so much easier for your loved ones.
It might be worth it for your family to hire a probate lawyer to sort things out for more complicated situations. Luckily, funeral expense insurance can help to cover expenses incurred and does not go into probate.
Leaving an Inheritance
You may choose to use the entirety of this money as an inheritance or to leave the remaining funds after the funeral arrangements have been paid.
However you elect to do this, your loved ones will be touched.
Perhaps you would prefer to leave money to a charity close to your heart rather than to a family member.
You can do this by listing the charity organization as a beneficiary to receive a percentage of the death benefit or instruct your trusted beneficiary to donate the remaining funds.
Other End of Life Care
End-of-life care for seniors can add up in a hurry. The good news is that many of the below-listed care possibilities are covered by medicare, medicare, and other health plans.
- Hospital Care
- Palliative Care
- Hospice Care
- Nursing Home Care
- Home Health Care
With that said, if any costs are already not taken care of, the death benefit from your life insurance plan can help to cover them.
Common Funeral Expense Questions
What Type of Insurance Covers Funeral Costs?
As long as the policy is active, most life insurance can cover the cost of funeral arrangements. Having a whole life insurance plan is generally considered the best option because it is permanent and does not expire. Funeral insurance is whole life and was specifically designed to cover these costs at an affordable monthly payment.
What Does Funeral Insurance Typically Include?
The death benefit that comes from funeral expense insurance can be used to pay for any necessary expenses. While this money is often used to pay for cremation, casket, cemetery plot, and other funeral arrangements, it can also be spent on other outstanding bills, legal fees or given to charity. The insurance companies do not restrict the use of the funds.
Many benefits make funeral insurance a good idea and have many Americans purchasing this whole life coverage.
What is the Best Way to Pay for Funeral Expenses?
There are many ways to cover funeral expenses. From life insurance to savings accounts, the most important thing is to be prepared. Providing this financial assistance allows your loved ones to celebrate the impact you left behind rather than be burdened by funeral costs.
a. There are many types of life insurance to cover funeral expenses. In fact, most types of life insurance coverage can pay for the funeral expense of the insured.
b. Funeral insurance was specifically designed for seniors as an affordable way to cover these costs. The money that the beneficiary receives is completely flexible and can be spent on anything necessary at the time.
c. The coverage amount that is initially taken out can be adjusted to accommodate any budget. To find the best life coverage, it is best to work with an independent agent that represents many insurance companies.
Willamette Life is an independent agency that specializes in funeral insurance coverage for seniors. Give us a call to find your best coverage option. 844-576-0019
Stacie manages the content for Willamette Life by keeping it up to date and accurate. By taking the questions frequently asked by clients she has been able to assist in developing a series of blogs that will hopefully be able to help more people than just those we are able to speak with.
We would be happy to answer your specific questions if there is anything we haven’t covered yet.