Finding ways to pay for funeral costs can be stressful at any age. You probably don’t want to think about it, but at some point, you will die, and someone will have to pay for the funeral. With the median cost of a traditional funeral running at $7,640, according to the most recent price data from the National Funeral Directors Association, creating a plan can help lessen the burden of expenses for your loved ones
You may think I’ll just set aside money in my will. That may work, but it’s not always the best way to go. Your survivors won’t be able to get that money until your estate wends its way through probate, which can take from a few months to a year. Since most funeral homes want full payment upfront, your survivors will have to front the costs out of pocket. Here are some alternatives for covering that final bill. To help make funeral costs more manageable, a life insurance policy, such as burial insurance, may be the answer.
How Does Life Insurance Work?
Life insurance works much like other insurance models. A person will need to pay their premium – usually monthly, though sometimes annually, to maintain their policy. The premium amount will depend on the level of coverage selected. The higher the coverage amount, the higher the premium amount will be. So if a person is looking for smaller monthly payments, they may opt for a smaller benefit amount on their policy.
What Can Life Insurance Be Used For?
There is a lot to understand when it comes to life insurance, but one of the most important aspects to note is that the benefit amount can typically be used in any way. When the life insurance policy pays out the death benefit to beneficiaries, the money is theirs to do as they please. For example, some families may save some of that money for child expenses in the case of an absent partner. Others may reserve a portion of the funds for funeral expenses as they see fit. This helps to relieve the financial burden that can accompany end-of-life services.
How to Use Life Insurance for Funeral Costs
There are a few ways to use life insurance to help cover funeral costs. Be sure to find the option that fits your lifestyle needs early on to avoid financial hardship for loved ones. 83% of consumers who purchase life insurance do so in order to cover burial and final expenses, according to LIMRA. To preserve the livelihood of those most important to you, consider these insurance options for coverage.
For a targeted approach to applying life insurance for funeral costs, burial insurance is a great option. This coverage is a good option for those over the age of 50 and generally has lower coverage amounts, perfect for end-of-life services. Burial insurance can be best for those on a budget with targeted needs.
Term Life Insurance
If a term life insurance policy is active at the time of death, the benefit amount may be used to cover the funeral costs and any other needs. However, if term life insurance is purchased young and the term expires before death, it may be ineffective for funeral cost planning.
Smart Ways to Cover the Costs of a Funeral
Many life insurance policies will pay a lump sum when you die to a beneficiary of your choice. It can pay for your funeral or any other general financial needs of your beneficiaries. The payment is made soon after you die and doesn’t have to go through probate. Fidelity Life Burial Insurance provides coverage and affordable premiums. Get a customized quote and answers to your questions from a licensed agent.
Fidelity Life offers RAPIDecision Final Expense which provides policyholders up to $35,000 of coverage. Applicants aren’t required to take a medical exam. Life insurance shoppers can choose between simplified issue final expense insurance or guaranteed issue insurance. A simplified issue is ideal for those who are in good health wanting to cover end-of-life costs. Guaranteed issue is ideal for those whose health or age prevents them from purchasing life insurance. Policy approval is given within days, and there’s no waiting period.