When a loved one dies, you're most likely caught up in the grief. This means you're often surprised when the tab comes up for the funeral.
In fact, many mourners often pay more than they need to out of guilt.
The good news is that you can help avoid the problem before you're gone with funeral insurance plans. Here, we're breaking down how to find the best plan for you and your family, one step at a time.
First things first: if you're thinking about your funeral now, pause to give yourself a pat on the back. Many people refuse to talk about death unless strictly necessary--death isn't taboo, necessarily, so much as people are discouraged from talking frankly about their own demise.
That's a bridge you'll have to cross if you and your loved ones want to properly prepare for your funeral.
With that in mind, let's talk about finding funeral insurance.
Before you do anything else, you need to sit down and estimate what your final expenses will be.
Note that we said final expenses, which aren't necessarily limited to funerals.
If we're counting end-of-life expenses in addition to funeral costs, then that means accounting for end-of-life care before you've died. About 50% of Canadian patients die in hospitals, and for those patients, end-of-life care includes hospital care.
Then, there are the costs incurred after you die. This includes things like:
As you can see, it's a much longer list than you were probably expecting.
This is why it's important to itemize each cost and estimate the total expenses.
So, what will all of this cost?
The first thing to figure out is whether you want a burial or a cremation.
Burial costs include things like body preparation, embalming, a casket, casket liner, cemetery plot, vault, etc., as well as costs related to transporting the body and funerary services.
As such, burial costs tend to be higher than cremation. The most bare-bones "good turnout" burial starts at around $5,000 but can go as high as $15,000.
Cremation is different since you won't necessarily have a funerary viewing that would require body preparation.
As such, a simple, direct cremation starts at around $600. A cremation that includes service and extra disbursements (i.e. obituary, flowers, etc.) can cost up to $4,500, though this can vary based on what province you live in.
You'll also need to factor in end-of-life costs into the total sum. End-of-life spending in Canada averages around $21,840 per patient.
Keep in mind, however, that this number includes those with terminal illnesses or major health problems. If you don't anticipate having health problems (or any significant ones, anyway) then this number may not apply to you.
However, end-of-life costs can also include things like living expenses, debts, legal fees, and bills, to name a few, which also helps drive the number up.
Once you've done a tally of your potential end-of-life costs and established a reasonable range, you need to determine if you'll leave enough money behind to cover the costs.
In other words: will there be enough money in your estate to pay off your final expenses? And if there is, will your survivors have immediate access to your estate funds so that they can use them to pay final expenses?
If the answer to either of those questions is no, or if you're not sure, then a funeral insurance policy may be a good option for you.
Fortunately, there are several different types of insurance policy that could work for you.
The most obvious first choice is burial insurance, sometimes called a funeral insurance policy. As the name implies, they're designed to cover costs associated with burial and funerals.
These plans are an attractive option for many because they're easier to qualify for than life insurance plans, as most of them ask few (if any) health questions and don't require a medical exam.
They also allow you to pre-arrange a service and pay ahead of time, ensuring your wishes are followed and alleviating the burden on your family.
That said, they also tend to offer lower benefits than most life insurance plans, you won't receive a discount for good health, and your amount paid in premiums may be higher than the cost of the funeral.
There are two types of burial insurance:
Standard plans are often offered by insurance companies under a whole life policy and are paid out to beneficiaries upon the death of a loved one to pay for final arrangements. The beneficiary can also choose to disburse funds to pay for expenses or debts owed by the deceased.
Pre-need plans are given directly to the funeral home you've elected to work with rather than a loved one. This is an attractive option for some because it allows you to pay for services that may be cheaper now than they are in the future.
However, if your insurance has a surplus leftover from the final cost of the funeral, the remainder will not be disbursed to your loved ones.
That said, not all funeral insurance plans are created equal. Some may be better for you depending on what you're anticipated expenses are and what you want the insurance to cover.
Regardless of what specific type of funeral insurance you choose, any good policy will have the following features:
Level premiums mean that the premiums won't go up in price as you get older, which is important since you don't know how old you'll be when you die.
You also want a whole life policy (in other words, a policy that accumulates cash value and stays in force through the end of your life, as opposed to a term life policy that only covers you through a specified term and expires).
And while a medical exam might seem like a good idea, it may limit the extent of coverage a company is willing to grant you. Either way, you're going to have to answer a few health questions for an underwritten policy.
Once you know what you're looking for in a policy, it's time to start shopping around.
You should get a quote, preferably from multiple insurance providers.
Not only will this allow you to compare costs between plans, but it will also help you get a sense of how much insurance you'll actually need.
Once you have multiple quotes and you're comparing various plans, you need to figure out if you can actually afford the kind of insurance you want.
It's tricky to find a discount, and those discounts usually come with a mile-long list of caveats and disclaimers. Policies will also vary depending on what province you live in.
Regardless of how attractive a plan looks, avoid plans that increase in price as you get older or plans that only cover you for a set term. You don't know when you're going to die, and you don't want a plan that eats through all of your resources or ends up completely useless.
Now that you know the makings of a good plan, it's time to shop for funeral insurance plans that will best help your loved ones after you're gone.
It's a big step, but it's an important one for helping out your family in the long run.
We offer a variety of products from the biggest insurance providers in Canada and North America. Click here to find any necessary insurance forms to start the process.
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