One of the easiest ways to pre-pay for a funeral is to buy burial insurance (also known as funeral insurance). Instead of picking out details like caskets or cemeteries now, you simply set aside a lump sum that is payable out to your beneficiary upon your death. They can then use the money to fund your funeral in a way that fits with your wishes and their grieving needs.
Because burial insurance is a “guaranteed” payout (unlike car insurance, which will only pay out in the event of an accident, everyone will eventually die and collect on their burial policy), most of the costs are fixed. Your policy provider will take into account your age, your desired method of payment, and how large your payout is. From there, you will choose a policy that fits with your needs. This means that while one person (say, a 50-year-old in good health) might pay a fairly small monthly charge, another person (someone in their 70s who is a smoker) can expect larger monthly fees and even big upfront costs.
How Large are Death Benefits?
In most cases, individuals take burial policies that pay out anywhere from $5,000 to $25,000. This figure is large enough to cover an entire funeral (often with money to spare), but is typically smaller than a life insurance policy, so it costs much less to take out in the first place. How much money you want paid out will directly influence how much money you pay monthly.
Those under the age of 40 can typically find policies that cost only a few dollars per month, while individuals in their 50s or 60s may be able to secure burial insurance for around $30 per month. With each advancing decade, these numbers increase. Those who are only looking into burial insurance in their 70s, 80s, or even 90s will typically have to pay a large portion of the premium up front.
What Does this Mean for Funeral Planning?
If you are fairly young, burial insurance can be purchased for a low monthly cost, but will continue for much of the rest of your life—which can add up over the years. If you are older, you may be asked to pay out a large lump sum ahead of time—and because this large lump sum can also be used to pay for specific funeral items (for example, you could purchase a cemetery plot, buy the casket, or even pre-arrange an entire funeral with the funeral home of your choosing), it may make more sense to look into your options first.
It’s also a good idea to consider burial insurance versus life insurance. While burial insurance typically has the advantage of paying out very soon after death (so the money can be used for the funeral), life insurance may have better options and lower premiums.
No matter what you decide, it’s a good idea to start early. Secure lower monthly rates, have more options, and feel more secure with your decisions by planning your financial future while you have plenty of time.
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