Planning your funeral may be the last thing you want to do. Still, these conversations are necessary for many to ensure that family members, friends, and loved ones will not struggle to pay thousands of dollars for burial and funeral costs. Better yet, with the right burial insurance plan, these conversations will be minimal since you will no longer have to stress about this complicated and delicate situation.
However, before you choose just any insurance plan in Florida to cover these final costs, you must understand what burial insurance is, the different options that include prepaid and pre-need burial insurance you have, and how this type of insurance will help you and your family when it comes to your funeral and burial expenses and even your outstanding debts.
What Is Burial Insurance?
Burial insurance usually refers to a whole life insurance policy with a death benefit. These benefits can range anywhere from $5,000 to $25,000, and as its name implies, people tend to buy burial insurance to provide their loved ones or family members with money for their burial and funeral costs. That is why burial insurance is also often referred to as funeral insurance or final expense insurance.
Typically, to purchase burial insurance, individuals will need to fill out an application and answer some health-related questions. However, a medical exam will generally not be required.
Who Should Consider Burial Insurance?
The target market for burial insurance is often those individuals who are over the age of 50, are in poor health, do not have savings or other life insurance to pay for funeral expenses, or are on a tight budget. However, because of the benefits that this insurance can provide families, most companies extend coverage to almost everyone, including even those as young as 30 days old.
How Much Coverage Do I Need?
In the United States, the median cost of a funeral with burial and a viewing averages over $7,000. However, this price does not include the cost of a vault, which is often required by a cemetery.
In comparison, the national cost for cremation without a casket and urn averages around $5,000. Yet, since a cremation casket is often required, the median price of a cremation plus an urn will cost a family around $6,645.
It is also important to point out that these figures do not include other burial and funeral expenses such as markers, monuments, flowers, or obituaries. That is why before you purchase burial coverage, it is important to speak with a professional who can help you determine exactly how much coverage you should buy for your individual desires.
What Are the Different Types of Burial Insurance Plans?
There are two kinds of burial insurance—standard funeral insurance and pre-need funeral insurance. However, both of these insurance policies will help an individual set aside money for their final arrangements.
The Standard Funeral Insurance Plan
Most insurance companies offer the standard funeral insurance plan as a whole life policy. Meaning that once you pass away, this insurance money will be paid out to your beneficiaries for your final arrangements, which can include:
- Burial costs
- Casket expenses
- Funeral home services
- Transportation needs
- Headstones, obituary notices, and flowers
- Urn expenses
Your beneficiaries can also apply these funds to other debts or expenses you owe, such as legal bills, medical expenses, credit card debt, mortgages, and other personal loans.
The Pre-Need Funeral Insurance Plan
This type of insurance is offered by life insurance companies as well as funeral homes. However, unlike the standard funeral insurance plan, these funds are given directly to the funeral home you decide to work with instead of a designated loved one and are paid out almost immediately after your passing.
This insurance policy helps people save money by allowing them to pay for services now, which may make them cheaper than they will be in the future. Unfortunately, if you end up paying more for your plan than what your funeral ends up costing, your beneficiaries will not receive the difference in costs.
What to Look for in a Pre-Paid Funeral Plan?
Prepaying for your funeral is one way to ease the burden on your family following your death and make sure your wishes are carried out. But pre-paid funeral plans come with risks, so you need to exercise care when purchasing a plan.
Funerals are expensive and can take a lot of effort to plan. To help relieve your family of some of this expense and effort, you can pay for your funeral in advance with a pre-paid funeral plan purchased through a funeral home. In addition to making things easier for your family during a difficult time, pre-paid funeral plans can also be a good way to spend down money in order to qualify for Medicaid.
However, consumers lose money every year when funeral homes go out of business before the need for the funeral arises. If the funeral home mismanages your funds, there may be no way to recover them. In addition, customers are not always entitled to refunds if they change their minds, and some funeral homes sell policies that require additional payments or that can't be transferred if the customer moves.
If you decide to go ahead with a pre-paid funeral plan, the following are things to consider:
- Shop around. Prices among funeral homes can vary greatly, so it is a good idea to check with a few different ones before settling on the one you want. The Federal Trade Commission's Funeral Rule requires all funeral homes to supply customers with a general price list that details prices for all possible goods or services. The rule also stipulates what kinds of misrepresentations are prohibited and explains what items consumers cannot be required to purchase, among other things.
- Make sure you have a reputable funeral home. There have been cases of unscrupulous funeral providers taking advantage of customers, so make sure you choose a funeral home with a solid reputation.
- Read the contract carefully. Before signing, it is important to know what you are agreeing to. Can you cancel the plan and get a refund? Is the plan transferrable if you move to another area? Are you paying just for merchandise or for funeral services as well? If prices for funeral merchandise and services rise, will your estate be responsible for paying additional costs?
- Find out where your money goes. The pre-paid plan should provide information on what the funeral home will do with the money you pay them. Some states have protections in place to make sure the money is safeguarded, but other states offer no protections. Is the money put into a trust account? What happens to the interest income? Is there a plan if the funeral home goes out of business? What happens to any money left over?
- Make sure the plan won't affect Medicaid benefits. If you are buying the policy as part of Medicaid planning, you must purchase an irrevocable plan, which means you can't cancel or change it once it is bought.
Once you've purchased a plan, be sure to tell your family about the plan you've made and let them know where the documents are filed. If your family isn't aware that you've obtained a plan, then the plan is useless.
Get Started With Your Burial Insurance Plan Today
Although conversations regarding burial insurance may not be the most enjoyable, they can significantly help your family down the road and reassure you that your death will not crush your family financially.
However, choosing the right plan for you can be incredibly personal. That is why you need to work with a knowledgeable provider who can get you the information required to make a sound decision about this critical investment. For these reasons, if you want to find out more about pre-need or pre-paid funeral insurance policies and what they can do for you, reach out to us today and let us introduce you to a trusted prepaid funeral professional to help bring peace of mind to both you and your loved ones.
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