Burial insurance, also called final expenses insurance and funeral insurance, is a kind of whole life insurance policy that specifically covers the final expenses that come up after you pass away. These can include purchases like caskets, urns, flowers, and burial plots, and it can include services like funeral arrangements, venue rentals, catering, burial services, transportation fees, and legal costs. A standard funeral can cost $10,000 or more, so taking out a burial insurance policy helps your family make the necessary payments without going into debt.
Consider A Package Deal
Another way to pay for your funeral is to make your final arrangements with a funeral home. Funeral directors can work with graveyards and crematoriums and handle the full process: the embalming, the viewing, the service, the procession, the internment or cremation, and any wake or memorial you want to take place afterward. They can also help your loved ones scatter your ashes or arrange a family plot so other family members can save some money and have a final resting place surrounded by good company.
The Prepayment Option
When a funeral home offers this sort of all-in-one deal, they usually also come with a prepayment option. If you take advantage of this, you can lock down the price before inflation drives it higher in the future, and in some cases, funeral homes won’t provide any sort of reservation or priority unless you pay them first. You can run into trouble if you end up moving away from home or change your mind about the arrangements, but for many seniors, a prepaid funeral is an excellent idea.
How Burial Insurance Changes Things
Like other forms of life insurance, the benefactor is someone other than you, and that benefactor can draw on your policy after you die. However, your benefactor doesn’t have to be your next of kin or any of your relatives. Instead, you can specify the funeral home as your benefactor and let them use your policy to pay for all your funeral and burial expenses.
The upside to this approach is that the funeral home can use this policy as a prepayment for your funeral package. That means you get the reservations and priority, at least as long as you keep up your premiums. However, the downside is that your family won’t be able to use your burial insurance policy to cover other final expenses that the funeral home might not handle. For instance, a funeral home probably won’t be involved in the will reading and estate settling, but the right final expenses insurance policy might cover these costs.
You can also pay for a funeral ahead of time by setting up a trust that names the funeral home or by using a Medicaid service. If you don’t have much money to spare on premiums, another member of your family could set up a burial insurance policy on your behalf and still have the funeral home be the beneficiary. Speak with a life insurance broker to learn more.