The cost of a funeral is no easy expense for families who have lost a loved one. In fact, the average funeral in the United States costs around $6,000, not including burial costs such as headstone and cemetery fees. With these additional costs, average final expenses hover somewhere around $8,000-$10,000 — a costly burden for many families. Final expense insurance is one way to reduce the costs of a funeral passed along to loved ones and is something that individuals who are pre-planning their final arrangements should consider.

What is Final Expense Insurance?
Final expense insurance policies provide funds to an assigned beneficiary after the policy holder passes away. Policy holders pay a monthly premium, which varies based on the amount of coverage obtained. Coverage amounts typically range from as low as $5,000 to as high as $50,000. Monthly premiums are just a fraction of the payout, and usually range between $30 and $70 per month.

Policy holders may select term or whole life insurance policies. "Term" policies expire when the policy holder reaches a certain age. Various insurances have different term limits, but 80 years of age is a common end point. Whole life policies never expire, so the policy holder's family if guaranteed to receive money to cover the policy holder's funeral expenses. However, rates are generally higher for whole life policies with the same coverage. Individuals purchasing final expense insurance should weigh the benefits and drawbacks of each option. For example, if term coverage is obtained, is there a plan in place to cover funeral expenses if the term expires, or will the costs need to be passed on to family members?

One major benefit of final expense insurance is that it pays out quickly — usually within 24 hours. Traditional life insurance may takes two months or more, meaning that it typically isn't paid until after the time it is needed to cover funeral expenses. Having a speedy payment can be a major relief to families who are already emotionally burdened.

Additionally, health generally isn't a factor to obtain final expense insurance. It's actually intended for the elderly, though many companies do cut off enrollment at a certain age, such as 75. Even those with serious conditions can obtain coverage. In these cases, coverage amount usually goes up over time for the same premium. So, if the policy holder dies in the first few years of obtaining the insurance, the family may not receive the full benefit. However, they still will receive some payout.

Alternatives to Final Expense Insurance
Individuals with significant savings may consider a special savings or pay on death account through a bank, payable to his or her beneficiaries after death. However, for individuals that do not have available savings of $5,000 and up, final expense insurance can be a valuable option. For many individuals with already strapped finances, monthly premiums are a more affordable option than quickly trying to save thousands of dollars to pass onto their families after their death.

Some funeral homes and cemeteries allow individuals to pre-pay their funeral and plot fees. This is another alternative. However, individuals should be sure to ask if rates paid will be "locked-in," and if payment can be transferred to another funeral home. For example, what happens if the funeral home closes before your death?

These are just a few of the many considerations individuals who are contemplating final expense insurance should consider. For many, final expense insurance provides peace of mind to individuals who are preparing their final arrangements and hope to reduce the burden on their family after their death.

Funeral expenses for grieving families who have lost a loved one can be significant. The average funeral cost is tricky to determine because funeral costs can vary widely. Some families choose the highest-end and priciest options, which can drive the cost of a funeral upwards of $10,000 and beyond, while others select much less expensive options. Regardless of a family's choices, every funeral includes the same general types of expenses.

Caskets. Casket prices vary widely. The least expensive caskets on the market cost around $1,000, while higher-end models generally cost around $3,000-$4,000. The average casket costs just under $2,300, according to the National Funeral Directors Association. However, the ceiling for casket prices is incredibly high. Michael Jackson was reportedly buried in a $30,000 gold-plated casket from the Batesville Casket Company. Bronze, other metal and wooden caskets are also available.

Casket Vaults. Caskets are traditionally placed within vaults as they are placed in the ground. The average cost of a vault is around $1,200, but can range from $500 for a concrete casket vault to $2,000 and up for granite-plated and other higher-end options. Metal options, including stainless steel, are also available. On the highest end, bronze vaults, such the Wilbert Bronze Burial Vault, will cost you around $10,000.

Headstones/monuments. Headstone costs also vary widely, based on the type of material the headstone or monument is made out of. Flat grave markers are a few hundred dollars, while vertical headstones generally cost around $1,000 for basic monuments. Higher-end models, such as granite or marble headstones, cost several thousand to $10,000. Mausoleums can cost $10,000 and up, with some priced as high as $35,000.

Cemetery fees. Cemetery fees also vary widely. Municipal-owned cemeteries are often the least expensive, with burial plot fees ranging from $400-$600, on average, for residents, and $1,000 and up for non-residents. The cost of a burial plot in a private cemetery generally ranges from $1,000-$4,000 and up for premium locations. Cemeteries also charge a fee for opening a burial plot. Generally, opening a burial plot costs around $400.

Funeral home fees. Funeral home fees average $4,000-$5,000. Funeral home costs typically include a basic service fee, removal/transfer of remains to the funeral home, embalming and other preparations of the body, use of the funeral home for services, use of a hearse and memorial programs.

Miscellaneous. Other funeral costs include obituary costs and flower costs. Many families order a casket spray of flowers, which can cost several hundred dollars.

Adding everything up, total funeral costs range around $4,000-$5,000 on the lower end, and $10,000 and up on the higher end.

While many people have savings, final expense insurance or life insurance to help their family's cover some funeral expenses, those without coverage or inadequate coverage should plan ahead to reduce any financial burden on their families after their death. With a little funeral pre-planning, you can help your loved ones reduce the costs they must cover.

 1. Choosing the wrong funeral home

Funeral homes can vary in price thousands of dollars for similar services and merchandise.  As a general rule, family owned funeral homes are much less expensive than large corporate owned funeral homes. The Family Service Agency partners only with locally owned, family run funeral homes.  This means you will  be dealing with a trusted member of your community, not a distant corporate boss interested only in rising stock prices.

2. Choosing the wrong cemetery

Like funeral homes, cemeteries vary greatly by price.  In almost every circumstance the least expensive way to buy cemetery property is from the city in which you live.  Most cities offer a discounted rate for residents.  This discounted rate is often less than half what others outside of the city limits would pay.  Also remember to look at all of the fees, not just the cost of the plot.  Many private cemeteries have fees that significantly raise the total costs of your purchase.

3. Waiting until after a death has occurred to make choices

After a loved one has passed away the  emotions of grief can make it very difficult to make sound financial decisions.  By making some of your choices before the need arises you can significantly reduce the cost of funeral services by avoiding this emotional overspending. Pre-planning your funeral also offers you the ability to customize your services to reflect your values, history and story.

4. Waiting until after a death has occurred to pay for your funeral

Historically, funeral prices have doubled about every 12-15 years. By delaying the payment of your funeral it is virtually assured your family will pay more for your funeral tomorrow than you would pay today.  Because most funeral home services and merchandise can be guaranteed against inflation, a proper pre-arranged funeral plan can literally save your family thousands of dollars.  At the Family Service Agency, we specialize in properly funded pre-arranged funeral plans. Let us show you how pre-planning can save you thousands.

5. Choosing the wrong payment method for your funeral plan

There are many different payment options and funding companies to choose from when pre-paying for your funeral.  Choosing the wrong one can be a huge mistake. Let me give you an example:  let's say you are 65 years old and you want o pre-pay for a $7,000 funeral.  Depending on the payment option you choose you can pay as little as $7,000 or as much as $13,920.  Choosing the wrong option can cause you to pay double!  At the Family Service Agency, we have over 15 years of experience helping families just like yours make the right choices.  



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    February 2013