A funeral can put you in debt. Many people are not prepared for any costs associated with funerals, which means they take on debt to cover those costs. According to Market Watch, the funeral market in the United States is worth about $20 billion. There are 2.4 million funerals annually, and many generate debt for the family. Here is how you can prepare for funeral costs and avoid funeral cost debt.
1. Pre-Planning a Funeral
It sounds a little morbid to plan your funeral, but there is a lot of logic behind it. If you don’t want your family to take on debt for your funeral, paying for your funeral before you die is a good way to do that. It is also a great way to save money on costs.
Funeral costs continue to rise; locking in pricing now can save thousands of dollars. Pre-planning and prepaying for your funeral is an easy way to reduce the risk of debt and find significant savings. It takes the stress off your family and ensures your end-of-life planning is carried out how you want.
2. Check Your Life Insurance
It is important that you become highly familiar with your life insurance coverage. There may be clauses you are unaware of that can affect the debt a funeral can generate. For example, according to Bankrate, many policies will not pay out if the insured passes away while committing a felony. Another clause (the slayer rule) is if it is suspected that the beneficiary killed the insured, the insurance is not paid out.
Of course, they are extreme clauses, but other clauses can be hidden in your policy that may affect the payout. You must read your life insurance policy from beginning to end to understand what coverage is provided and what clauses exist. If things are not as planned, consider shopping for a new policy.
3. Complete Funeral Costs
Funeral costs are often underestimated. The cost of a funeral has many different components that, if unprepared for, can generate debt. For example, a funeral requires fees paid to a funeral home, purchasing a casket, flowers, and other incidental expenses. If burial is the plan, you will need to cover the costs of a cemetery plot.
According to Livability, rural cemeteries have been popular since the 1830s and continue to be popular. Rural cemeteries are usually less expensive than urban cemeteries. The average cost of a cemetery plot ranges between $500-$10,000, depending on the geographic location. A complete cost analysis of a funeral’s components is essential to ensure an informed decision is made.
4. Cremation Services
Many people make the mistake of thinking that a cremation means there is no funeral service. You can opt for cremation and still have a service at a much lower cost than having a traditional funeral. Getting creative with end-of-life services can be an easy way to avoid debt. On average, cremation costs about 15% of traditional funeral and burial costs.
Taking on debt for a funeral can be financially devastating. Cremation can help families avoid debt for end-of-life costs. Sometimes, adjusting plans is necessary to avoid. Most religions accept cremation; it is done with dignity and comes with added benefits. It may be the right solution for your family.
No one likes to talk about death and dying and plans surrounding funerals, but they are conversations that need to be had. Funeral expenses are something that should be planned to avoid debt. Learn more about planning for funeral expenses today.