Everything You Need to Know About
The Average Cost of a Funeral is $10,000 (AARP.org)
10 Important Things to Know About
Funeral or Burial Insurance:
1.) NO medical exam required
2.) Premiums NEVER increase
3.) Accumulates CASH value
4.) Insurance NEVER decreases
5.) EASY to obtain up to age 80
6.) Protection is GUARANTEED
7.) Prepays ALL funeral costs
8.) Prepay any expenses or debts
9.) Your beneficiary can ALWAYS be changed
10.) QUICK coverage ranges from $2,500 to $50,000
Like so many families, when we suffered the loss of my mother last year we faced the difficult decision of what to do next. Because we were never willing to accept this as a possible outcome, nor did we think about planning in advance for this incomprehensible loss, we had no idea where to begin or who we could turn to.
Most people tend to overlook one of the greatest gifts you will give your family, which is properly preparing them for the inevitable. At best, you might have started your estate planning process by creating and choosing a Last Will or Living Trust.
However, the harsh reality is that approximately over 70% of Americans have no form of estate plan. So by having a will or Trust, you have clearly taken a step in the right direction toward preplanning your future financial wishes. The problem is, this form of planning fails to accomplish the most important task, which is addressing your family’s immediate concerns.
The person, or in most cases people, responsible for taking care of your final arrangements are usually forced to make extremely important decisions, as well as major financial purchases, within a small time frame…usually within approximately 48 hours after your death. Of course, you cannot expect to fully alleviate the emotional and financial stresses of your loved ones during such a difficult time, but you can help them tremendously by having a plan that outlines your funeral wishes.
Most financial professionals are realizing that an integral part of a sound financial and estate plan is taking care of your funeral services ahead of time. To preplan a funeral gives you the ability to choose your method of disposition, the exact type of services you want, and allows your family to focus more on things such as grieving and recovery. In addition, preplanning is also a good thing for you because it allows you to make extremely important decisions through a calm and clear thought process. Emotionally, it is much more likely that you will create a more rational and logical end of life plan.
When preplanning your funeral, here are several general guidelines to begin your preplanning process:
* Visit various funeral homes and interview multiple funeral directors
* Choose a funeral home and director where you think your family would be most comfortable
* Consider bringing family members with you during this selection process
* Be aware and informed of bereavement entitlements such as veterans, unions, fraternities, etc.
* Consider religious and moral convictions, and discuss them with your family
* Determine your method of disposition (burial, cemetery, entombment, cremation, etc.)
* Plan your ceremony considering things like casket viewing, religious aspects, who should be included, etc.
* Itemize your costs
* The Federal Trade Commission offers a free funeral planning guide titled “Caskets and Burial Vaults” (202-326-2222) which has made it easier for consumers to comparison shop.
* The FTC Funeral Rule requires funeral directors to give pricing information over the phone, as well as provide you with a readily available General Price List if you visit them in person. This FTC Funeral Rule also allows you to purchase caskets, which are the single largest funeral expense, from outside vendors without the threat of a carrying charge.
What About Paying For Funeral Expenses In Advance?
Although planning your funeral arrangements in advance may help alleviate many of the details, prepaying (also known as prearranging or a Pre Need Plan) for your funeral services is a way of taking care of the actual expenses.
Prepaying your funeral or cremation is one of the fastest growing, and most appreciated and accepted aspects of funeral planning. Similar to preplanning your funeral, paying your funeral expenses in advance is also becoming widely accepted by many financial professionals as a solid piece of a sound financial and estate plan.
When prepaying your funeral plan, the most common and widely used strategies are savings and life insurance, mainly because they tend to be deemed the most reliable and readily available. However, there are several other strategies to consider when prepaying your funeral costs or expenses:
Although many people choose to set aside savings to pay for funeral expenses, there are several reasons this does not always end up working out as originally planned. First, the savings can be depleted based on unexpected financial circumstances, such as health or financial issues. Second, these funds are not always readily available and liquid upon death due to the challenges and restrictions often found in estate planning. Third, the funds set aside can often be insufficient due to inflation and the rising cost of funeral expenses. Finally, it should be noted that savings are included in a part of one’s estate, and, thus, the taxable consequences can often come into play.
Term Life Insurance is widely considered to be a flexible, simple, and affordable way to pay for your final funeral expenses. Although Term Life Insurance has a set term, or set number of years, it also has multiple uses in prepaying for your funeral. Because upon your death it becomes a liquid asset that is usually not part of your estate, it can be used for many things such as funeral, burial, cremation, liquidity, and many other things, including debts or obligations.
In addition, there are some types of life insurance that allow the funds contributed to these policies (either in lump sum, monthly, quarterly, semi-annually, or annually) to grow and accumulate as a cash value that can be accessed if necessary. Therefore, these policies can not only be used for funeral expenses, but also for other financial planning options that may arise such as financial emergencies, college, etc.
Funeral insurance is an insurance policy which is specifically designed to cover any costs or expenses which are directly related to your funeral. If you purchase one of these policies, one of the options you have is to determine exactly which funeral costs or expenses are to be covered, such as flowers, burial plot, grave marker, and much more.
Another option you have is for the policy to be paid out in a single lump-sum, which can be used to cover your pre-determined costs or expenses, or simply help your loved ones financially as they plan for you. There are many insurance companies that offer funeral insurance packages, and certain funeral homes or funeral companies also offer policies.
Pre-Need Trust Agreements
Another alternative to prepaying your funeral is to consider a Pre-Need Trust Agreement to pay for your costs or expenses. Generally speaking, these Trust accounts are typically funded with monthly payments that are invested in a fund which is designed to grow over time. Although a Trust account is designed to provide the potential for protection against inflation, it is not guaranteed to do so.
Take the First Step Today
In summary, although nobody likes to think or talk about dying, it is one of the facts of life we all must eventually face. If you are trying to build a successful financial plan, the only way you can be sure your plan works smoothly and efficiently is to be proactive about your planning process. This is particularly true and necessary when creating a proper plan of succession, which I firmly believe should include an end-of-life plan.
Sometimes I feel as if I am the only person in America who is speaking about one of the most important plans you can create, an End of Life Plan. The harsh reality is that very few individuals, families, or even financial professionals are regularly teaching, practicing, or implementing End of Life Plans.
Nothing Good Comes Easy
Why is that that more than 80% of people in America die without leaving behind their End of Life Plan and preferences? I believe it is because these are the only types of plans that directly addresses death and dying. Therefore, most people would prefer to overlook or ignore this type of conversation. The problem is that, in doing so, you are leaving these matters to your spouse, children, and/or family members – to pile on top of what is already one of the most difficult times of their lives.
The fact of the matter is that an End of Life Plan should be a standard and routine part of a comprehensive financial or retirement plan. Period. It is the missing piece to the financial services puzzle that needs to be fixed.
Fact: Some Day You Will Die
Sure, the last thing any of us want to do is talk or think about is how to plan a funeral. And this is not just “a funeral”, but rather your own personal funeral. So I get it. I fully understand why an End of Life Plan is not such an easy and comfortable discussion. However, some day every single one of us will die (hopefully later versus sooner), but we will die. So this means that “someone” is going to be forced to deal with planning your End of Life Plan and preferences.
So ask yourself this question; “Would you rather take care of your final arrangements yourself, or leave it to your loved ones who are already suffering from the grief and loss of your death compounding insult to injury?”
We all know for a fact, with absolute certainty, that we are all going to die some day, right? So why is it that most people are not talking about this? Why are financial planners not learning the best ways to plan their clients and families for their inevitable death? Why is it that, at the very least, everyone is not taking a few minutes to simply document their End of Life Plans and preferences for our loved ones?
Financial Planners Should Encourage an End of Life Plan
In addition to being the Founder of this website, I have worked as financial planner for over 23 years and currently own my own Wealth Management practice.
I mention this because, for the most part, the financial planning industry overlooks and ignores End of Life Plans, Pre Need Plans, and Final Expense Plans. These plans are not widely-recognized as an all-important additions to a comprehensive financial and retirement plan.
To prove this point, here is a fact: Prior to losing a loved one and experiencing how to plan a funeral myself, I had never heard some talked about this subject. This includes all of my 20+ years of studying, training, attending classes, getting licenses and certifications, and more.
How About You and Your Financial Plan?
Has your financial planner discussed this with you? Does your financial plan include your End of Life Plans and preferences? Are these details documented and written down in a safe place? Do you currently have a plan in place for your pre-arranged funeral or cemetery arrangements? Have you created a plan to specifically designate which monies will prepay funeral expenses and funeral costs? Do the people you love know what you really want? Have you notified them regarding the fact that you have taken care of these End of Life Plan details? Do they know where these plans and details are located?
You are Not Alone
If you do not currently have an End of Life Plan in place, you are not alone. Given my personal experience, I can tell you that losing my mother was, by far, the toughest day of my life. And like our situation, here is what happens in most cases. Just about the time when it starts to “sink in” that your loved one is really gone, and your emotions begin to elevate, all of a sudden you find yourself sitting in a Funeral Home or Cemetery, reviewing all of their funeral home services and planning a funeral. This is probably the last thing anyone wants to be doing during a difficult time like this.
Just Some of the Funeral Planning Challenges
• How do you transport the body? Where do you transport it? How soon?
• What vital statistics do we need to gather, and how soon?
• How soon afterwards should the funeral and/or memorial service be?
• How do you determine which Funeral Home, Cemetery, or Funeral Director?
• What if the deceased lives out of town?
• Sitting down with a Funeral Director to review all the details and options
• Try to figure out what your loved one “would have wanted”
• Making some incredibly difficult financial decisions
• Trying to figure out what type of memorial service your loved one “would have wanted”
• Did they want to be cremation or traditional burial?
• Choosing among many different types of caskets or cremation urns
• Where should the final resting place of their body or ashes be?
• How do you coordinate this with your religion/Church?
• Who should be invited, and how do you invite them?
• Arranging travel and accommodation plans for out-of-town guests
• Who will give the funeral eulogy? How to give a eulogy?
• How will this be paid for? Were there any burial insurance or funeral insurance policies?
• Who will speak at the memorial services? Which songs and prayers do you use?
• Do you have a gathering afterwards?
• How do you place an obituary? Who does this?
• Do you want funeral flowers or donations?
• Arranging funeral programs, sending “thank you” cards, and much more…
End of Life Plans Save Money
Another huge benefit to creating an End of Life Plan is that, in addition to saving your family from going through emotional challenges and making difficult decisions, you could very likely save your family thousands – or even millions – of dollars. The reason why is when someone dies, there are many financial matters that accompany the funeral planning such as funeral estate planning, estate taxes, death taxes, capital gains taxes, income taxes, insurance policy proceeds, investments, real estate, bank accounts, mortgages, other debts, and much more.
Plan Now – Don’t Wait!
A wise man once said, “The difference between failure and success is largely determined by the amount of time and preparation put into preparing for the future.” By creating a solid End of Life Plan – and then adding this as a part of a sound and comprehensive financial plan – nothing could be further from the truth!