Is funeral insurance a smart investment? The following is a post from staff writer Crystal at Budgeting in the Fun Stuff, where she writes about finding the balance between paying your bills, saving for your future and budgeting in the fun stuff along the way.
Since a lot of people may be wondering whether or not funeral insurance is a good deal or a rip-off, I have taken a look. Although the answer varies depending on your situation, here are a few reasons why funeral insurance can be a good thing.
Funeral Insurance Provides a Fast Cash Payout
Let’s say you don’t have enough life insurance. The family still needs money. It can take a while to get access to the assets of an estate, which can make it almost impossible to pay the funeral home for services. One of the best things about funeral insurance is that the payout is immediate and it will take care of all of the costs associated with a funeral. This includes the costs of a casket, grave plot, hearse, flowers and cremation. That money can really help your beneficiaries.
Funeral Insurance Prevents Financial Hardship for Loved Ones
Funerals can place a lot of financial pressure and strain on a family. The average funeral costs $10,000 or more once you add in the costs of a service and burial. Most people sadly do not have this kind of money on hand. You don’t want your family to have to get a loan in order to get money for a burial. Funeral insurance can take care of all or part of your final expenses, which will make it a lot easier on family members who are still coping with grief.
Funeral Insurance Is Useful if You Purchase an Affordable Policy
Funeral insurance makes sense to purchase as long as you select a policy that has affordable premium payments. You do not want to pay thousands of dollars into a policy that has a minimal payout and does not provide adequate coverage in the event of death. You might be better off simply funding a savings account for these expenses and giving your beneficiary immediate access.
Funeral Insurance Should Offer a Cancellation Option
The insurance policy that you purchase should have a cancellation policy that allows you to receive a refund of payments paid into the policy if you decide to cancel. There will probably be a cancellation fee, but you do not want to lose all of your money because you decided that you no longer want funeral insurance.
My Personal Take on Funeral Insurance
If you do not have enough cash set aside to cover your funeral in case you die, I see funeral insurance as something that could help. But I personally would suggest that the policy be cancelled as soon as the cash is set aside.
My husband and I do not have funeral insurance but we do have enough cash on hand to cover a basic ceremony as well as six months of living expenses to help each other during those really hard months after the death of a loved one. We actually don’t discuss it much anymore since it is depressing, but I have made sure that all of our login info is secure but easily accessible by my husband if I do die first. I wanted to make sure he could access all of our finances no matter what.
In short, funeral insurance may be a good deal for anybody without sufficient cash reserves for their estate since it provides help during a time of crisis.
What is your view on funeral insurance?