By Rick Lucas
Many people either do not know or do not want to face the financial reality of paying for a funeral. Funeral homes expect to get paid as soon as the services have been completed. It is the responsibility of every adult to make adequate plans to avoid leaving the burden to their loved ones. Each method has its pros and cons so each individual needs to decide which works best for them.
Preneed Funeral Plan. A pre-arranged or pre-planned funeral is a preferred method of many people when preparing for the inevitable. It can be paid in full or in installment payments that fit your budget to a specialized insurance company. Funeral costs rise every year so a benefit is that paying in advance will lock-in your costs and can save your family money if you plan to live for several more years. Planning your funeral service now ensures your final wishes will be realized and takes the onus off of family members to make decisions when in mourning. There is some growth potential and certain tax advantages.The plans are transferable if you move away. Funeral trusts are another popular choice for planning ahead funeral arrangements. Both offer some growth and are Medicaid exempt. Consult with an experienced funeral director to better understand all of your options.
Life Insurance. Life insurance may be the most common funding choice to cover funeral expenses and any general financial needs of your survivors. Most funeral homes will file a claim on your behalf ensuring prompt payment. There can be unexpected complications such as lapsed policies and the wrong beneficiary so be vigilant to keep all insurance matters current. If you plan ahead you can provide your designated funeral home with a copy of the policy for them to keep on file. This will simplify payment arrangements for your family.
Personal Account/CD/Pay-on-Death Account. This is a type of bank account. You name someone as the beneficiary and give them access to the account. They present a death certificate and they are given the money on the spot. The beneficiary would only be allowed access to the money upon your death. You can add to the account anytime but the interest generally will not be sufficient to cover inflation over a long period of time. These accounts are not Medicaid-exempt.
Veterans Benefits. If you served in the military then you can be buried in a national cemetery for free. The Veterans Administration will pay a burial allowance to your survivors to cover other funeral expenses. If you are not being buried in a national cemetery, the VA will pay a sum to cover the expenses of the burial plot elsewhere.
Credit Card or Funeral Loan. Not the best option but paying for your funeral on a credit card or a funeral loan is a possibility if there are no other options. It is best to not go into debt over a funeral. Funeral loans are unsecured so they are hard to get and the interest rates are high, bordering on astronomical. Consult with your funeral home because they may offer a no interest option for a short period of time until other arrangements can be made.
Low-Cost Options. There are cheaper alternatives such as cremation, at-home funerals or green burials. Donating your body to a medical school is a low cost option and will help to train medical students. After a few years the institution will cremate the body for free and deliver the ashes to the family.
Crowdfunding Websites. If there is no plan at the time of death then crowdfunding websites exist to help gather funds. Gofundme.com is an option and there are funeral funding websites specifically for paying for a funeral. These sites exist to provide options for funding a meaningful ceremony.
Other Government Agencies. Social security pays a small death benefit to surviving spouses. Some states pay small amounts toward funerals for people on disability, Medicaid, or are homeless. Also, some states have compensation for victims of DUI or murder victims.
The sooner you decide to make final arrangements the more choices you will have. It will be necessary for you to weigh the risks and benefits for each funding method to find what best suits you. It can be a tough topic to tackle but once it is finalized and the plan set in motion you and your family will have peace of mind that your final wishes will be followed and your family can concentrate on grief and healing instead of payment plans.