You may not know it, but your life insurance policy will be more than enough to cover funeral expenses. Everyday, Americans are purchasing life insurance policies to cover the costs that accrue when they pass away. Life insurance policies can cover a multitude of expenditures, including funerals, cremations, bills and any additional expenses related to the passing of a loved one.
The Average Cost of a Funeral
According to the National Funeral Directors Association, the average cost for a funeral in the United States is $6,600. An additional $3,000 is often needed for the grave site itself and any vault or liner that will be used in the process.
While it may sound harsh, funeral directors often try to tack on extras and promote their services in a subtle, yet sales oriented way. Use the following tips to help you save money on a loved one’s funeral:
- Shop around – Approach multiple funeral homes to get the best price available for the best quality of service. Choosing the closest funeral to your home may potentially cost you thousands of more dollars if you do not compare them with one across town.
- The total cost – When comparing multiple funeral homes, get a clear picture of every cost involved. From transportation to embalming charges, everything has a cost. Getting a breakdown upfront of all charges can save you money when shopping around.
- Basic service fees – Everyone who hires a funeral home to bury a loved one must pay these fees. They commonly range from $1,000 to $2,000, but can be as high as $5,000. They cover death certificates, staff members, planning, permits and more. If you see something within these costs that doesn’t make sense to you, ask the funeral director to explain it thoroughly.
The Average Life Insurance Payout
The average life insurance payout is around $200,000. If life insurance is collected due to the death of an individual, the insurance is not taxable. In can take three months or more to collect the payout from your life insurance company.
Term life insurance is purchased for a particular period. If you buy this type of life insurance and pass away during the pre-determined period in the life insurance contract, your family will receive a payout to cover any related expenses.
The following types of expenses are covered by life insurance:
- Debts – Whether you have a car payment, mortgage or credit cards, your life insurance covers these debts when you pass away.
- Funeral Expenses – One of the biggest expenses that occurs when a family member passes away is for the funeral and related services. Life insurance will cover any funeral costs, including burial or cremation and more.
- Dependents and Loved Ones – If your passing has caused any financial stress for any of your dependents, life insurance will cover those costs as well. From college tuition, to nursing home care and other medical expenses, the life insurance policy will alleviate any unwanted stress from expenses.
Life Insurance Policies Will Cover Funeral Expenses
Because the average cost of a funeral is less than $10,000, your life insurance policy will more than cover related expenses. Check your policy to see how much of your policy is dedicated towards the funeral itself.
Most life insurance policies include burial insurance. Normally written as part of the policy, an average burial insurance clause covers roughly $15,000 of the total costs of the services.
Planning for the funeral of a loved one can be stressful for everyone. To make the process easier for you and your family, ensure that the right life insurance policy is in effect and that all necessary steps have been taken to protect all dependents financially.
About the author:
The writer, Brennen Kliffmueller, is a financial advisor who strives to press the importance of things like insurance on families so they don’t get caught off guard. For shopping around for an insurance plan, he highly recommends Insurance Land for life or any other kind of insurance you might need. You can learn more about him on Google+.