As we've discussed already in this column, any adult with dependents should have a term life insurance policy to provide for their families in the event of their death - but as you age, you should also consider purchasing a final expense insurance policy as well.
Sponsor Link
Don't leave your family in debt. Get the Globe Life LongLife Plan.
Below, I'll answer your most common questions about final expense insurance and how it can protect you and your family:
Q: What is final expense insurance?
Also known as 'funeral insurance,' final expense insurance is an insurance policy that ensures a fixed cost for your burial and related funeral expenses upon your death - the policy itself pays for these fixed costs through the premiums that you pay on the policy.
Q: How much does a funeral cost?
It's extremely odd to think about it this way, but a funeral is one of the most expensive products or services that you will ever purchase. That's right: behind a home, a car, and sending your children to college, it is likely that you will spend more money on the cost of your funeral than on anything else you will ever buy. According to the National Association of Funeral Directors, the average funeral costs at least $6000. Funeral costs have tripled in the last 15 years and are only expected to go even higher.
Q: Why are funerals so expensive?
Well, like everything else, funerals have been a victim of the rising cost of products and services all across the country. Still, it helps to understand what goes into the typical funeral - things that you may never have considered, such as the cost of renting a hearse, the cost of renting a funeral home viewing space if there will be a wake, the cost of the time,the funeral home's personnel will spend preparing for the funeral and serving your loved ones during the services, the cost of embalming and preparing the casket, and the cost of the casket itself. When taken together, it's hardly surprising that the total bill for a funeral is so high.
Q: What will my funeral insurance cover?
Like other types of insurance, final expense insurance can be bought in many different forms and you, as the purchaser, can choose what level of service to purchase. In addition to the items described before, there may be additional costs for such things as cemetery plots and headstones (and engraving for the headstone).
By working with a qualified and reputable insurance company, you can select a final expense insurance plan that provides for all, most or some of these items and services. Depending on the state of your personal savings, you may only need a simple level of funeral insurance - or you may want to cover everything, to ensure a healthy inheritance for your loved ones once you've passed on.
Q: Are there alternatives to a traditional funeral and final expense insurance plan?
Many people ask about how to arrange a low cost funeral. First, you can do things like selecting simple metal caskets rather than more expensive wood or laquered materials for the casket. You can choose not to hold a wake and proceed straight to the burial ground for a simple ceremony. Or, most economical of all, you can choose cremation over burial, which is far less expensive. It eliminates the need for embalming, cemetery plots, headstones, and wake viewing, which reduces your final expenses significantly.
Q: So, do I really need final expense life insurance?
It's a smart idea to provide for your family. It's an even smarter idea to lock in today's prices for final expenses - if you think about prices possibly tripling again in the next 15 years, you can easily see that you can only win by locking in a low cost funeral now, which is what you will do when you purchase a final expense insurance plan today.
About the Author
Alison Overholt is a freelance writer based in New York. She holds a degree in government, with honors, from Harvard University and writes frequently about business, travel, and lifestyle subjects for national magazines and other publications.
