Many older Americans considering burial needs
Funeral insurance makes some tough end-of-life decisions easier for family members
The current economic crisis is spurring both younger and older generations of Americans to re-evaluate their financial situations and develop responsible investment plans for the future.
Over the course of the recession – which officially began in December 2007 – new workers and seniors on the brink of retirement watched stock portfolios and 401k) investments plummet in value as the market dropped from record highs.
Although the stock market has gained some ground, it has caused many people to remain in the workforce longer than anticipated in order to rebuild their savings. Others, with kids nearing college age have been faced with the tough decision of how to allocate their money – for retirement or for tuition.
Many have made sending their kids to college debt-free a priority and in turn their retirement savings have not been cushioned sufficiently.
But other big expenses besides college have been weighing on people’s minds – is it the right time to buy a new home? Or, is a new car affordable now?
Yet one of the biggest hidden costs that affect people later in life is paying for a funeral and all of the affiliated expenses. The Federal Trade Commission FTC) estimates that funeral plus services and other costs can run upwards of $10,000.
With more people mapping out their financial futures with precision, anticipating the costs associated with burial and funeral are an important piece of the puzzle – or else family members could be burdened with the expenses.
That leaves some consumers considering the option of funeral insurance or burial insurance. Generally, these plans are a life insurance policy with benefits ranging from $5,000 – $25,000 that are intended to be used to pay for burial and other funeral costs.
These plans can be purchased for an individual or to cover a family with premiums paid in small amounts over the course of some time period and benefits paid out directly to the funeral home in some cases or to another trusted beneficiary to put the money toward a person’s final wishes.
According to the National Funeral Directors Association, this type of pre-planning for end-of-life expenses is growing increasingly popular.
In fact, one major national insurer says that Baby Boomers in particular are likely to be interested in this type of insurance because they are increasingly taking advantage of all available financial tools and pre-need plans are the last frontier for life coverage.
Costs associated with end of life are also accounted for in similar plans called pre-need coverage where, again, money is being set aside for expenses like a casket.
Setting aside money in advance to cover funeral costs gives many people a certain amount of control over some decision they will not be around to make. Assuming family members follow through on stated wishes, a specific type of casket, ceremony and flowers will all be pre-arranged.
But those interested in funeral or burial insurance should be wary when taking out coverage. Like many other financial plans, people attempting fraudulent schemes are looking to make money on unsuspecting victims.
Most experts advise buying a plan from a reputable insurance company.
In addition to signing contracts and taking out insurance plans that may pay-in-full or defray the cost of a funeral, ensure that family members or close friends are fully aware of personal wishes for end-of-life ceremonies
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Posted: June 08, 2009
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