Planning for your funeral may feel morbid, but it's a practical step that can save your family a lot of stress and financial strain. We, as insurance brokers in Denver, CO know it's not something you want to think about, but it's important to address these financial matters to ensure your loved ones are taken care of.
Peace of mind comes from knowing that your family won't face financial stress during a loss. While emergency funds can help, they might not be enough to cover all funeral expenses.
We've all seen the stories of families turning to crowdfunding for funeral expenses. Don't let this happen to your family. Here’s a practical approach for setting up a funeral fund instead:
1. Get an Insurance Policy
For a reliable financial solution for funeral planning, consider final expense insurance. This type of life insurance provides a lump sum death benefit that can cover funeral expenses and other financial needs of your loved ones.
Final expense insurance, also known as 'burial insurance' or 'funeral insurance,' is essentially a smaller type of whole life insurance. It provides a tax-free lump sum death benefit to cover funeral costs and other end-of-life expenses for your family.
With so many insurance options available, it's important to do your research before purchasing any products or services. This will help you avoid unexpected costs during a difficult time and ensure you have the peace of mind that comes with proper planning.
Renowned companies like Mutual of Omaha, Senior Life, and AARP offer different types of it. With so many options available, it can be overwhelming. Let Sater Insurance help you find the best company for your financial situation.
Life insurance offers significant peace of mind for those who care about their loved ones. While discussing death isn't easy, understanding the potential challenges of final arrangements can help you plan effectively.
2. Fund Your Financial Goals
Pre-planning your funeral can alleviate financial stress later on. One effective strategy is to establish a separate savings account specifically for funeral expenses. This account should be set up with a trusted individual who will be responsible for managing the funds.
A traditional savings account isn't ideal for this purpose, as the funds may be inaccessible until the probate process is complete. This can cause significant delays for those needing immediate access to cover funeral costs.
A joint account, on the other hand, offers the advantage of bypassing probate. This means that your designated beneficiary can access the funds upon your passing without the lengthy and potentially burdensome probate process.
One potential drawback of using a savings account is the temptation to withdraw funds for other purposes. If this happens, you may end up with insufficient funds when you need them most. For this reason, we believe that a final expense insurance policy is a more reliable option.
3. Open A Payable-On-Death (POD) Account
Setting up a POD account, sometimes called a Totten trust, can be a great move for those looking for peace of mind when it comes to planning their funeral expenses. It allows you to set aside funds to be used for your funeral expenses that don’t have to go through probate. Though it’s not a joint account, the person you name as the beneficiary isn’t able to touch the money until you pass away; and yet, you can still withdraw or add to the account whenever necessary.
Ensure that the beneficiary is someone you trust to use the funds wisely for the intended purpose. A payable on death (POD) account offers a simple and secure way to pre-plan your funeral arrangements. While not suitable for everyone, it can be an effective solution for those who want to address their funeral expenses in advance.
4. Investigate More Economical Alternatives
Funeral costs can quickly escalate.
If you're on a budget, consider alternative options like direct cremation or an at-home funeral. To save money on funeral merchandise, explore the Legacy Assurance program. This program offers affordable options compared to traditional funeral homes. Here's a brief overview:
- Give members access to high-quality caskets, or vaults.
- All products are guaranteed at discounted rates, significantly lower than traditional funeral home prices.
- Have their WISH Team negotiate funeral service costs.
For those who wish to contribute to medical research and future generations of healthcare professionals, donating your body can be a meaningful and cost-effective option.
By carefully considering all available alternatives, you can make informed decisions that align with your preferences and respect the deceased's wishes. Remember, everyone's needs and desires are unique.
5. Maximize The Prepayment Options Of Funeral Homes
While funeral homes may offer convenience and a variety of pre-planned options, the Funeral Consumers Alliance (FCA) advises against purchasing prepaid funeral plans.
These plans can become problematic if your circumstances change significantly between the time of purchase and your passing. For example, if you relocate to a different state, the prepaid plan may no longer be valid.
For greater flexibility and security, consider final expense insurance plans. These policies follow you wherever you live, providing peace of mind in the face of unexpected events.
To avoid financial strain in your later years, it's essential to proactively plan for your funeral expenses. Establishing a separate savings account specifically for this purpose can offer a reliable and independent approach.
6. Borrowing Money for Funeral Costs
Funeral costs can be substantial and financially burdensome. While obtaining a loan might seem like a viable solution, it's crucial to understand the associated details before making a decision.
Personal loans from banks, credit unions, or specialized lenders can come with high interest rates, especially for borrowers with poor credit. If you have good credit, you may secure lower rates ranging from 5% to 10%.
Before borrowing, carefully research reputable lenders and compare interest rates, finance charges, and repayment terms. This knowledge will help you make an informed decision about financing your funeral costs.
The Bottom Line
Secure Smart Financial Strategies for Funeral Planning
Communicating your funeral wishes to your family or legal counsel can be a challenging but important step in ensuring that your desires are respected.
If you believe a final expense insurance policy is the right choice for you, we encourage you to contact us or request a quote. Our friendly insurance agents are ready to assist you and your family in selecting a suitable policy. It can provide valuable support to your loved ones during a difficult time.
By planning, you can alleviate unnecessary financial burdens and legal complexities for your family. Your legacy is not only about what you leave behind but also how you lived your life.
