Cremation Insurance! Help Your Family Pay Your Final Expenses

Cremation insurance isn’t a topic people want to discuss. Many don’t even consider it until they have children. 

While cremation is one of the most cost-effective ways to handle your remains – you can elect to have a burial, too.

Some people pre-pay their funerals to avoid delays and the financial impact of burial costs. Unfortunately, there is a downside. Funeral homes are businesses, and there’s no guarantee the funeral home will be around when the time comes to bury you. 

So it would be best if you did your homework regarding final expenses.

Let’s see how insurance can help!

Note: Ouch! You Need to Be Sure You Pick The Right Funeral Home

“If the funeral home mismanaged your prepaid funds for whatever reason and was unable to cover agreed upon funeral expenses, you would not have an easy time recovering those funds.”

“Speaking of mismanagement of funds, if your chosen funeral home goes out of business, in most cases there is no guarantee that your funds will be returned to you. Once you make your prepayment to the funeral home, those funds cannot be transferred to another funeral home because the original plan is specific to that funeral home.”

“Worse yet, if they declare bankruptcy, you will be standing in a long line to get your money back and may only receive cents on the dollar, if anything.”

3 Reasons You Should Never Prepay Funeral Expenses, The Motley Fool 

This Is Where Final Expense Insurance Comes In

What is Final Expense Insurance?

Final expense or cremation insurance is a life insurance policy that pays out money tax-free to your survivors (family members or loved ones) when you pass away.

Insurance agents and companies use different jargon to describe final expense insurance, which can be confusing. But let’s set the record straight – all this different terminology is talking about the same thing:

Final Expense Insurance = Cremation Insurance = Burial Insurance = Funeral Insurance.

You get the idea.

The best part? Unlike prepaying your funeral, final expense or cremation insurance proceeds go directly to your beneficiary(s), who will use the funds to care for your final affairs. 

These life insurance policies, designed to cover funeral costs and final expenses, bypass probate, eliminating much waiting time. 

Whether discussing burials or cremation, it’s all whole-life coverage.

All final expense insurance or burial insurance policies are whole life insurance. This means you’re covered until the day you die. Final expense or cremation insurance differs from traditional whole life in that it is explicitly designed to cover funeral costs, not to accrue cash value. 

If you don’t know this already, funerals are costly. The Funeral Association of Canada (FSAC) estimates the average burial cost between $8,000 and $10,000. The average cremation cost in Canada is slightly cheaper, at around $5000 to $6000. 

…and this doesn’t include bells and whistles most people like to include when they say goodbye to a loved one. This means the price tag for a funeral can be more than $10,000, which for most people is a serious chunk of change. 

Cremation & Why It Makes Sense For Many People 

While we’re all familiar with a traditional burial, some are unaware of the cremation process. Cremation reduces the body to its basic elements through exposure to intense heat.

The body is committed to a cremation chamber in a casket, and once the cremation process is complete, the ashes are collected for the family to dispose of as they wish.

Typically, you take them away in an urn, but the family decides this as part of the planning process.

Many people choose cremation because it is significantly less expensive than burial. Final expense insurance helps to cover these costs. 

What Does Cremation Insurance Cover?

Cremation insurance plans to pay your beneficiaries a death benefit payout when you pass away. The money provided is used for funeral home fees, cremation, cremation casket, the urn, and/or any lingering debt or financial obligations.

Because cremation insurance is specifically created to cover final expenses, it’s always permanent insurance (whole life). The good news is as long as you pay your cremation insurance premiums, your loved ones will receive a payout.

The face value of this type of insurance is smaller, keeping the cost down and allowing people to afford it later in life. Final expense insurance policies, like cremation insurance plans, are designed with senior citizens’ budgetary constraints.

How Much Insurance Is Needed for Cremation

As you can imagine, this figure varies substantially from person to person. 

While the median cost of cremation in Canada is approximately $5,000, you can spend more or less. It’s a good idea to ask local funeral homes for information regarding the pricing of their services.

The next step is determining the environment you want to provide on the day. Remember, each decision you make has a price attached. Often, families employ the services of musicians, speakers, and caterers. All of this should be taken into consideration. 

Once you have your final figure, add a bit more for inflation. Funeral costs typically double every ten years.

Note: It is a good idea to include any remaining debt in your calculations.

How Much Does Cremation Insurance for Seniors Cost?

The cremation cost in Canada fluctuates depending on the amount of coverage purchased, age, and health history. The face value isn’t as high as other life insurance policies because the coverage is earmarked explicitly for funeral costs and other final expenses.

To determine the cost of final expense insurance, it’s a good idea to work with an independent life insurance agent, like James at Policy Architects, or contact companies directly.

The truth is that cremation insurance plans are very affordable.

Planning & Your Beneficiary(s)

Choosing Your Cremation Insurance Beneficiary 

Life insurance terminology is tricky, especially if you’re unfamiliar with the industry.

The insured is the person whose life is covered under the policy, and the person who pays the premium is called the policyholder or owner. However, the insured and the policyholder are often the same, especially when discussing final expense insurance.

But that’s not always the case. Some adult children choose to buy a life insurance burial policy for their parents because they know they’ll eventually be paying the funeral costs. For them, it’s easier to make small payments over time than pay out a larger lump sum when one of their parents dies.

The beneficiary is the person who receives the death benefit when the insured passes away. You may assign multiple beneficiaries. This is something you should consider. Having more than one beneficiary is smart because it ensures that the death benefit goes to someone of your choosing.

It’s always good to remember that if your beneficiary passes away, the disbursement of the death benefit becomes much more complicated.

That’s why it’s essential to pick your beneficiary wisely and to have a backup. Also, ensure all the policy information is filled out to the best of your ability. The proceeds may be held or left in limbo if a life insurance company can’t locate the beneficiary. 

How Do You Pre-Plan Cremation With Life Insurance?

Preplanning is the key to financial success, which will hold through the end of your life. The most important aspect of preplanning your cremation is understanding the actual costs.

Honestly, a little research and thought go a long way. Talk to local funeral homes to better understand their services and pricing. Look into different crematories to see how their services and costs differ, and then create a budget to determine the realities of your expenses. 

If you already have a whole life insurance policy, you may want to consider the death benefit as part of your final expense insurance plan. 

Many people don’t have whole-life insurance policies, so it’s a good idea to look at final expense insurance for cremation today. Policy Architects has access to the best funeral insurance companies in Canada.

Another critical point is to speak to your friends and family about your plans. It’s always a good idea to put your wishes regarding your funeral and final affairs into writing. This leaves little room for confusion in an already stressful time. 

Remember, cremation insurance helps your loved ones out when they need it the most. If you plan, this coverage will finance most, if not all, of your funeral costs. Alleviating these worries and financial burdens gives them more space to grieve and cherish fond memories.

Guest Posting by Alice Stevens, BestCompany.com

Author Bio:

Alice Stevens is a language enthusiast, loves history, and enjoys traveling.

She manages content for BestCompany.com, specializing in finance, insurance, and car warranties.