Death and taxes. They’re inevitable, right? We reflect, out of obligation, on one at least once a year and take the steps we need to be prepared. Perhaps it’s a coincidence that both require financial planning and preparation, but we have a tendency to put end-of-life expenses on the back burner and believe we’ll prepare later. Unfortunately, for many, later never comes and families and loved ones are caught unprepared for funeral and burial costs. Further, it comes at a time when other important decisions must be made, all under a blanket of grief which can cloud our decision making.
What if, instead of putting it on the back burner, we prioritized a plan for the future, a plan for the inevitable? Afterall, making sure your family is protected against potential financial obligations is a priority, one that you can address by preparing for end-of-life expenses.
What are End-of-Life Expenses?
Funeral home directors and others who assist families at end-of-life, such as financial advisors, hear it all too often: “I had no idea how much it cost.” While funerals are often about and for those who are grieving, they’re also a way to honor our loved ones and, for many of us, that means providing them with a funeral and burial that honors their life. Sadly, funeral costs add up quickly.
End-of-life expenses are all of the bills your loved ones incur related to your passing from funeral and burial or cremation costs to medical bills and more.
Common Hidden End-of-Life Expenses
While we mentioned funeral expenses and burial or cremation costs, there are quite a few other costs associated with a loved one’s passing that often catch a family off guard. While many expect funeral costs to include a casket and burial or cremation, the handling of your loved ones body may involve additional costs like, for example, embalming which is not mandatory but may be a preference. Similarly, if your loved one doesn’t have a plot or mausoleum paid for, this expense can be significant, especially if it’s last minute. Further, depending on where you live and the time of year, weather conditions may complicate opening the grave and add to cemetery costs.
Outside of the funeral itself, you’ll still have, potentially, the cost of publishing an obituary; assisting relatives with travel costs and, potentially, lodging; the cost of a wake or post funeral celebration for family and close friends; any other additional memorials you’d like to include or create; and, if there’s a headstone or marker, the cost of engraving.
Finally, end-of-life expenses may also include out-of-pocket medical expenses, and some types of outstanding debt. Because this can create a substantial burden for loved ones, especially if estate funds are plentiful or readily available, many people choose to purchase some type of life insurance to protect their family members.
What Types of Coverage are Available for End-of-Life Expenses?
No one likes to be caught off guard and no one likes to think of their family struggling, especially during a time of grief. That’s why getting coverage ahead of time is a smart call. Not only does it allow you to plan for your financial future and give you peace of mind, but it also ensures your family can focus on what’s most important when that time comes.
Still, not all life insurance is the same, and when it comes to end-of-life expenses, you have a few options.
Term Life
At some stages of life, term life insurance can be a cost-effective way of protecting your family should your passing be unexpected or untimely. Many people purchase term life insurance when they get married or are expecting their first child as a way to protect their immediate family from the loss of their income and other contributions to the household. Level term life policies offer a flat rate for a set period of years (the “term”) and are typically very affordable for young, healthy individuals. Term life insurance, however, can become very expensive or difficult to obtain as you get older. As a result, people in their 50s or older are often better served by other options.
Preneed Insurance
With preneed insurance, you make the arrangements of your choice with a funeral home, and the insurance policy covers all of the associated costs. The premium is paid directly to the insurance company, normally based upon an amount that’s determined by the goods and services you select. Not only are the costs covered, but you can choose the end-of-life service you want.
This is an attractive choice for many people because they want to relieve their loved ones of the burden of planning and paying the costs associated with a funeral service and cremation or burial. Knowing your loved ones are cared for and can use the time following your death to simply mourn and remember can be a great comfort. Keep in mind, however, that a preneed policy covers only the prearranged funeral costs and not all of the other expenses mentioned above.
Final Expense Insurance
Final expense insurance offers more flexibility than preneed insurance because it can be used to cover any and all expenses your heirs incur at the end of your life. Your beneficiaries receive the death benefit of your policy and can use it as they wish. So, if you want to enable them to have a big party in your memory, take a family trip to scatter your ashes, or pay off debt that you leave behind, a final expense policy may be a sound choice.
Self-Preparation
Some people are financially comfortable enough to set aside sufficient funds to leave to their families to cover their expected end-of-life expenses. However, as we discussed, end-of-life expenses can be unpredictable, so if you decide to use this option, be sure to allocate enough to cover unexpected costs, incidentals, and then even a little extra to be safe. Again, the goal here is to get the end-of-life celebration or memorial you want, while ensuring your family is also taken care of at that time.
Final Expense Coverage from ELCO
ELCO Mutual comes from a unique perspective when it comes to end-of-life preparations. With significant experience and expertise in this area, we offer a variety of life insurance options to meet your needs. We understand how important, and often overlooked, this coverage is, so we’ve developed our final expense coverage with competitive premiums.
In fact, ELCO’s final expense insurance is unique as it is one of the only final expense policies that is participating, meaning the benefit amount can grow over time by utilizing non-guaranteed dividends. To purchase this policy, you must be at least 50 years old. Both immediate and modified benefits are available in amounts ranging from $2,500 to $35,000, depending on age and other qualifying factors.
Whether you’re just beginning to discuss these matters with your family, consider them for yourself, or you already understand that you need help, talking with experts can help. Let us help you get in touch with an ELCO agent today and help you prepare for future needs. One of the greatest gifts we can leave our family is love, and ensuring they are taken care of when they need it most is a great way to communicate that to them.