Funeral insurance, also known as final expense or burial insurance, is a type of life insurance that provides funds to a person’s survivors for the purpose of covering the expenses related to carrying out a person’s final wishes. This is especially applicable to expenses related to a funeral and burial.
Funeral insurance normally carries a low face value such as $ 5,000 to $ 50,000 with a beneficiary such as a family member who would make a claim on the policy and be paid upon the death of the insured. this money would, in turn, be used to pay funeral and related expenses. If the insurance payment is more than the costs incurred by the funeral, the remainder of the cash can be kept by the beneficiary to use as they wish. Since the beneficiary can legally use this cash any way they wish, make sure you trust your beneficiary. Otherwise, your final resting place may be in a paper sack.
Most people purchase funeral insurance prior to their need. This obviously takes the concern for these expenses off of the survivors when they are most vulnerable and often unable to cover the costs. This also gives the person covered the ability to ensure that they get the arrangements they want. This should not be confused with “pre-need insurance, which covers funeral and burial costs after they have been specifically chosen by the policy holder.
If a person is in ill health when they purchase this coverage, a policy called a “graded death benefit,” or “grab and go” policy can be purchased. This type of policy carries a benefit that gradually increases as time passes between the time the policy is ordered and the time of death.
Life Insurance Will Do It
It is important to remember that any monies that your beneficiaries receive from a life insurance payout can go towards funeral and burial expenses, but many people buy a separate policy for burial and funeral expenses to make sure that other insurance monies are guaranteed to go to the beneficiary. Funeral insurance is also offered at a lower face value than other types of life insurance.
Many financial advisers have their clients purchase a larger life insurance policy that will cover larger encumbrances such as a mortgage, college costs, and other expenses that will be dealt with by the survivors as well as the final expenses. Without these expenses, however, a final expense life insurance policy is a good idea.
The end of your life is inevitable. You will have no control over when you will pass away and how you will die. But one thing you can prepare for are your end of life documents that will ensure that at least your final wishes for your final breath will be followed.
It is recommended that you have an advance directive set up which are legal documents that will provide instructions to your family and healthcare professionals on how you want your future healthcare handled. An advance directive is composed of a living will and a healthcare power of attorney. These also are used to appoint a person that you trust to decide for yourself in the event that you can no longer speak for yourself. When making advance directives, be mindful as well of your state’s regulations for these as they differ from place to place.
I have listed some of the end of life documents that you might want to consider having. Make sure that you discuss these with your attorney and advise your family that you have this set up in case something happens to you to make sure that your final wishes for your healthcare will be followed. You might think that there is no need for you to have these ready when you have already provided instructions to your family. There are some states that do not allow family members to decide on end of life healthcare decisions, so it’s always better to have these ready for that time.
Preparing a Living Will
A living will is a legal documents that puts in black and white the medical treatments that you prefer when you can no longer communicate these as you reach the end of your life. This will help you and your family decide on what type of treatments will be provided to you towards the end of your life.
Also called directive to physicians or medical directive, a living will is protected by the Constitution and by case law. Your decision to accept or even refuse treatment is considered a legal right and will be protected. In order to have your wishes fulfilled completely, you must first make sure what your state allows under living wills as the state can control when the living will takes effect and will define which treatments will be applied.
Preparing a Healthcare Proxy or Healthcare Power of Attorney
This legal documents will let you assign a healthcare proxy. A healthcare proxy is a family member or a person that you trust who will have the power to decide the treatments that you will undergo when you cannot speak for yourself as you reach your end of life.
Once you have picked out your healthcare proxy, make sure to discuss with this appointed person your values about the quality of life and the treatments that you would like to receive when you reach the end of life.
Take note that the healthcare proxy that you are assigning will ONLY make decisions on your medical treatment. This is different from a power of attorney given to an individual which is solely for financial matters.
Preparing a Will or Living Trust
These are legal documents that are not related to your healthcare but should also be prepared if you want to ensure that all your properties and money will be handed down to your heirs. Most of the time, families are not aware of the different properties and businesses set up by the head of the family. Having a will ensures that you are able to divide these among your beneficiaries as you see fit.