The average funeral costs between $7,000 and $9,000. However, depending on the location and the deceased’s last wishes, crossing the $9,000 mark is certainly possible. If you have aging parents, then discussing burial insurance options with them can be a wise move. This allows you to financially plan for their final expenses. Therefore, ensuring they can get the service they want without a loved one having to break the bank.
What is Burial Insurance?
Burial insurance is a special kind of life insurance. The policies provide funds to help pay for funeral services and needed items, like caskets after the covered person passes away.
In most cases, burial insurance is a cash policy. The policy builds cash value over time and is typically available in smaller amounts than life insurance policies. For example, you can find burial insurance with coverage options near $5,000 and $10,000, specifically to help cover a person’s final expenses.
Like all insurance policies, coverage is based on paying premiums. This is a set amount that you usually pay monthly, semi-annually, or annually, that keeps the policy active.
Burial Insurance Coverage
Since burial insurance is meant to cover final expenses, you can only use it on specific costs. For example, the funds from a burial insurance policy payout can cover the funeral service, casket, cemetery plot, headstone, procession, and some miscellaneous items or services. You may need to coordinate with accident lawyers in Buffalo to know what your coverage is in case of accidental death.
Do Your Parents Need Burial Insurance?
Whether your parents need burial insurance depends on their (and your) unique financial situations. If they have an active life insurance policy, then additional burial insurance may not be necessary. However, that would be dependent on them having a large enough life insurance policy to cover their final expenses. It would also handle other pressing financial issues after their passing.
Additionally, if they have already prepaid for certain final expenses, insurance might not be as important. Some people chose to purchase their cemetery plots well in advance. By choosing early, they lower the amount of unpaid expenses. Similarly, if they have cash savings that could cover the costs, insurance may not be as critical.
However, if your parents lack life insurance or only have a small life insurance policy, do not have much in savings or investments, and family members do not have the money available to cover their final expenses, burial insurance is worth exploring. It gives your parents the ability to get some coverage that can help with these expenses. This coverage ensures they can get the funeral service they want without financially burdening their family.
Deciding How Much Burial Insurance Your Parents Need
If your parents do not have the money available to pay their final expenses and are not covered by a reasonable life insurance policy, then figuring out how much burial insurance they need requires some research. They will need to detail how they envision their funeral, where they would like to be buried, and what kind of service they want.
Once you’ve collected that information, it is wise to contact local cemeteries, funeral homes, or similar providers to get estimates. You can discover how much their ideal funeral will cost, giving you a dollar amount to work with as you explore burial insurance policies.
After you know how much their final expenses will be, you can explore burial insurance coverage that aligns with those dollar amounts. Usually, it is better to round up in these cases. Funeral costs tend to rise with time. This means that a service that would cost $5,000 today may be closer to $6,000 or higher in a few years. Unless family members are prepared to make up for any shortfalls or your parents have additional savings, don’t be too conservative when selecting the size of the policy.
It is important to note that, if your parents’ have Medicaid and their burials will be fairly low-cost (such as below $2,500), then they may have access to Medicaid funeral benefits. These programs vary by state, so you will need to check with a local office to see what is available and how the program works.
How to Talk with Your Parents About Burial Insurance
Speaking with a parent about their final expenses can be daunting. After all, most people do not want to focus on the possibility of their death and few children want to imagine their parents no longer being with them, even for planning.
While the conversation can be hard, it is a necessity. Usually, the best way to begin is to sit with them and let them know your goal is to have a service that meets their wishes. This allows them to choose how they will be remembered, acknowledged, and treated at a delicate time.
Then, you may have to carefully guide the discussion. Ask if they want to be buried or cremated. Have them identify their preferred cemetery or a place where they want their ashes scattered. Find out if there are songs they want you to play, the kind of service they envision, and if they have a favorite flower, or poems, passages, or writings they want you to read.
Handle the conversation as delicately as possible and see what information you can gather. Then, you can introduce the financial planning aspects, letting them know that you want them to have what they pictured, so examining savings, life insurance, and burial insurance is the only way to make that a reality.
Do you or your parents have burial insurance? Share your experience in the comments below.
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Tamila McDonald has worked as a Financial Advisor for the military for past 13 years. She has taught Personal Financial classes on every subject from credit, to life insurance, as well as all other aspects of financial management. Mrs. McDonald is an AFCPE Accredited Financial Counselor and has helped her clients to meet their short-term and long-term financial goals.