Sadly, 105 people die every minute (on average).
Death isn't a cheery subject. Neither are finances, for a lot of us.
Naturally, when you put the two subjects together, it isn't a comfortable conversation.
The average person lives paycheque to paycheque, so coping with funeral expenses can be a massive financial burden.
This begs the question, how will funeral insurance help me? Is it worth it or, is it just an unnecessary cost?
Let's find out...
Firstly, we need to clarify the terminology.
Funeral insurance goes by a couple of other names including burial and final expense insurance. Don't let these different labels confuse you, because they effectively mean the same thing.
Typically, you can buy funeral insurance from most major insurance companies and funeral homes.
Occasionally, employers offer employees coverage as a form of benefits. Be sure to check out what insurance you already have before taking out a policy (there's little point in paying twice for the same thing!)
Put simply; funeral insurance pays a small amount (usually between $5,000 to $25,000) upon your death. Typically, this only covers your final expenses, and little else.
These funds are given directly to a specified recipient or a funeral director with whom you've already made arrangements before your passing.
Top Tip: carefully choose someone who'll handle these funds for you, you need to be sure they'll use them as you intended. Sadly, the recipient can spend your cash on virtually anything. They're not obligated to utilize the funds to cover your funeral expenses.
Here's a quick guide to how the process works.
It's very similar to taking out any other type of insurance.
You'll need to double-check the specific funeral insurance policy. However, you're probably looking at paying around $50 a month.
However, your monthly payments may be affected by the following factors:
When purchasing funeral insurance, there are a few things to consider:
In most areas of Canada, a $5,000 policy won't cut the biscuit- especially if you desire a burial rather than a cremation. Burials require you to budget for both a coffin and a plot.
Typically, policyholders take out $10,000 coverage. This gives them peace of mind. They can be safe in the knowledge their loved ones won't have to handle any surprise costs upon their death.
Top Tip: always look around and compare quotes to ensure you get the best deal possible!
This is a biggie.
Always check your specific policy before committing to anything. Typically, funeral insurance covers expenses relating directly to the:
Such things like:
You get the idea!
Typically, you couldn't claim for any end-of-life expenses such as medication or hospices. Similarly, to life insurance, funeral insurance doesn't pay out until after the policyholder's death.
Funeral insurance is a fantastic option, especially if you can't get standard life insurance. You may resonate with this if you fall into the categories below:
This is where funeral insurance comes into its own.
Funerals are way more expensive than you'd like to think. The average cost of a funeral with a cremation cost around $6,000, whereas, one with a burial is approximately $8,500.
So, if you and your family aren't prepared for this kind of expense, your loved ones could be left to pick up the tab. Obviously, this is where funeral insurance lends a helping hand.
On the whole, funeral insurance is more cost-effective than life insurance.
In light of this fact, your best bet is to do your research and see whether you can get a funeral insurance policy that covers everything you need. This is usually a cheaper option.
There's honestly something that'll suit all budgets.
You can either opt for a policy that'll shell out over $35,000 or can purchase as little coverage as $1,000. There's a plan that'll complement all tastes.
It's unbelievably simple to apply for funeral insurance, and there's a very high chance an insurance company will give you a policy.
Typically, you'll have to fill out an application form that's a couple of pages long. You'll need to provide basic personal info, answer a few health questions, and respond to any other queries the insurance company has.
From there, your insurance agent can work out how much you'll need to pay monthly, as well as what they're prepared to cover you for.
In theory, you could qualify for coverage in less than half an hour!
Unlike medical and life insurance, age isn't usually an issue. A lot of insurance companies accept policyholders well into their late 80's!
There's nothing worse than businesses poking and prodding around your medical history.
Not to worry, it's very rare for funeral insurance companies to require a full medical evaluation.
Instead, you'll have to answer a few meager health questions. Luckily, you don't need to be in the pique of health to qualify for funeral insurance. So don't overly worry about this section of the application.
When you're shopping around for insurance, be sure to ask all the questions below. That way you ensure you know exactly what you're undertaking.
Funeral directors and insurance companies tend to sell funeral bonds, they're not incredibly common- but they're still available if you're interested.
Typically, you'll need to pay a deposit and then the rest outright or in installments.
The money you've invested in these bonds can then only be cashed in to pay for your funeral expenses.
This is a fabulous option if you want to cover either a fraction or the entirety of your funeral.
Pre-paid funerals ensure the products and services you require are paid ahead of time, so everything's square after you've passed.
Typically, the cost remains the same as you paid at the time. However, this is something you should check before committing to anything.
The biggest drawback of pre-paid funerals is that they're not very flexible. It's very common for people to move away from home to access end of life care.
Therefore, you need to make sure you're able to transfer your services should you move away.
So, how do you fund a pre-paid funeral?
Monthly payments. Just like insurance, you pay minimum payments to a specific funeral home to cover everything you've outlined.
However, it's very rare you can get a refund should you change your mind, so be sure to double-check their returns and cancellation policy before signing the dotted line.
Did you find this blog post on funeral insurance costs interesting? If so, you can get a free quote with us! We'd love to help you decipher your options.
Alternatively, if you have any questions about this or the insurance industry more generally please feel free to reach out and contact us, and we'll get back to you as soon as we possibly can with a helpful response.