Offset Final Expenses with Life Insurance

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Planning our own funeral or making plans for our own post-mortem is uncomfortable. It may be easier to avoid confronting mortality by leaving the funeral planning up to our families, but it’s also a burdensome legacy to leave behind. Affording our survivors the ability to grieve without the added stress of financial uncertainty can be the greatest legacy we leave.

Fortunately, there are several insurance policies specifically designed to ease the financial burdens and remove some of the stressful decisions that our families are left with after we pass. (See Trent’s ‘Personal Finance 101: The Basics of Estate Planning’)

4 Steps to Offset Funeral Costs with Life Insurance

• Determine how much life insurance coverage you need to replace your income and cover funeral costs.
• Decide on the term of your new life insurance policy.
• Compare life insurance providers based on quality and affordability.
• Shop around for the best price on term life insurance you can find.

Burial Insurance

Burial Insurance is different than pre-paid funeral policies in that it’s a form of Whole Life Insurance offered by insurance companies independently of mortuary and funeral related merchandise and services. Burial insurance is sometimes marketed under different names, like Memorial Insurance, but unlike traditional life insurance, it is usually offered with a very streamlined underwriting process which requires you to swear that you are neither ill nor in a nursing facility.

Comparing Insurance Options

For example, Humana One offers two kinds of policies. The first, Life Pay, requires that premiums are paid over the lifetime of the insured. Alternately, with Humana’s 10-Year Pay policy, the insured pays a higher rate for 10 years and is then covered for life. The premium plan you select should be based on your individual financial circumstances and age.

Sentinel Security Life offers its’ New Vantage and Senior Life Insurance plans specifically to cover end-of-life expenses. Sentinel’s plans are whole life policies so the rate you are quoted is the rate you continue to pay even as you get older.

As a whole life policy, Sentinel’s also grows cash value that may be borrowed again if the need arises, but beware: any outstanding loan amounts will be deducted from the benefit at the time of your death.

Why Insurance is Safer Than Pre-Payment

Most of us are familiar with the idea of an out and out pre-paid funeral plan. And some of us are also familiar with the horror stories of families who’ve dealt with them. The problem with these plans is that policies are brokered directly through a funeral services director and, unfortunately, not all funeral service providers are created equally. The web is full of testimonies of paid-in-full-policies that were misrepresented or changed after the contract’s signor had passed. Families can be charged thousands more than anticipated, leaving them with the additional headache of taking legal action against a policy they didn’t even negotiate. This is of course, not always the case. Remember that it is your responsibility to educate yourself about the options available to you. Start here with a guide to understanding a funeral home’s general price list.

not all funeral service providers are created equally

Choosing Your Own Service Provider

Some policies allow assignment to the funeral home or service provider of your choosing. This allows you to make your arrangements in advance and free your family from some of the harder decisions involved in the ordeal.

And of course, taking control of your own final expenses can enable you to more closely manage costs.

Uncertainty combined with grief can drive the cost of end of life expenses through the roof. Family members often disagree on a loved one’s final wishes and individual contributions start to add up. And since no one wants to skimp on the memory of a loved one, your grieving family members will be especially vulnerable to the sales come-ons of funeral and memorial service providers. Check out ‘Making a Holographic Will,’ that Trent posted in 2008.

Uncertainty combined with grief can drive the cost of end of life expenses through the roof

Burial insurance alleviates the stress of wondering how to pay for your final arrangements and eliminates the need for your survivors to go into debt. By removing the concern for finances families are free to spend their energies remembering the wonderful life you all shared and providing for a future free from unnecessary debt.

And when it comes down to it, most of us just don’t want elaborate memorials, we’d rather our families kept their money for the living.

How to Tell Your Family About Your Funeral

When the end comes you will want your family to be able to navigate the process of laying you to rest in accordance with your wishes to be as hassle free as possible. You have taken the initiative to purchase insurance, applied the policy to a particular funeral home and have priced and chosen your casket, burial plot, flowers and more. All that is left is to tell your family.

An end plan does not have to be complicated or involve an attorney. The best course of action would be a two prong approach. First, tell your family and friends about the arrangements you’ve made and with whom. Second, prepare a written list of contacts and instructions for a specific family member to take responsibility for after your death.

Written instructions should include any funeral homes or mortuaries you have contracted and a list of your insurance policies, including your burial insurance. Be sure to include the insurers’ name, your policy number and benefit amount less any outstanding loans and finally the location of all of the original documents. Take the advice in Trent’s post on Handling the Estate Meeting.

Following these steps will mean you can follow the advice of Roseanne Barr “If you spend all your time worrying about dying, living isn’t going to be much fun.”