Hidden Funeral Expenses You May Not Be Aware Of

Life Insurance

We know life insurance covers the basics for funeral expenses, but what are the real costs it can assist with? Most people pass away in hospitals or nursing homes. Protocol dictates that body of the deceased be removed from the facility in a timely manner. But if no planning has been done, it is common for family and friends of the deceased to turn to funeral homes for guidance. This passive reactive approach will mean that family and friends will most surely pay too much for a funeral they will probably not even like, but worst of all, for the goods and services they provide that do not suit the deceased.

Most funeral trade journals have estimated the average cost of a conventional U.S. funeral will run between $4,700 – $8,000! This results in one of the most expensive items the average American family ever purchases. There are generally four main ways of handling the deceased: 1) donating their body to a medical school, 2) donating specific body organs to an organ bank, 3) arranging a simple funeral, without embalming; or 4) arranging a traditional funeral service conducted by a commercial funeral home (cremation or full body). For the time being we will focus the latter.

Life insurance can help with many of the additional or inflated costs associated with going the last minute traditional route. For example, costs for death goods and services vary widely, but caskets purchased through a funeral home are often marked up 5-10 times their wholesale costs. It is advantageous to plan and purchase them elsewhere ahead of time, if at all possible. It is wise for a person to put their wishes regarding the disposition of their body in writing to help provide the survivors with guidance and peace of mind that arrangements are made to their liking.

Death notices are also more costly than people may think. These are what we often incorrectly refer to as obituaries. The difference is that an obituary in the true sense of the word is a “news item”, usually prepared by the staff of a newspaper and is free, but in large metropolitan papers, few people’s death are sufficiently newsworthy to qualify for obituary status. Death notices however which will usually list the deceased’s DOD, names of survivors, accomplishments and likes, and the location of services. These death notices can cost as much as $300-$500!

One of the largest expenses for a traditional funeral that life insurance can assist with is the embalming of the body. Generally, most state laws do not require embalming unless the body will be transported by a common carrier, such as a commercial plane. If a body must be preserved for a short period of time, refrigeration is just as reliable and cheaper. Cremation is now used for roughly half the deaths in the U.S. If arrangements with a profit-making cremation organization have been made, be careful, as some have been known to charge “handling”, “transportation”, or “disposal” fees.

The deceased may also be able to save money by selecting their own cemetery ahead of time, as prices can vary significantly. The minimum costs include: 1) the plot, 2) coffin enclosure, which will usually consist of a vault or grave liner made of concrete or steel, 3) opening and closing the grave, and 4) the upkeep. Many cemeteries will try to add “perpetual care” as an additional cost to the latter “for eternity.” However, graves don’t require much care and what they essentially mean is that the grass will be cut.

Funerals can cost more than most people expect, so there are four ways of handling them: 1) don’t plan the funeral ahead of time and don’t buy life insurance (in my opinion, huge mistake on both ends!), 2) buy life insurance and let everyone handle the rest (better, but still not ideal), 3) plan the funeral but do not use life insurance to do it (still not ideal), or 4) plan the funeral well ahead of time, and use the life insurance you purchased ahead of time pay for it (now you’re talking). Don’t worry about dying unprepared; I’m here to help. 

About the author: Kyle McDonald holds FIC, FICF, FSCP® & CLTC designations. His viewpoint on life insurance is simple, “Anyone with a family must have life insurance. In the end, life insurance is for others you care about, not you.” He is ready to help you and your family get the best option available. Contact Kyle today at   1-800-651-1953 or KMcDonald@Pivot.com.