Life Insurance and Funeral Expenses: Everything You Should Know

Few of us like to spend too much time thinking about our own death (unless you find imagining your funeral to be oddly, morbidly fun…?).

But preparing for your funeral expenses could be one of the last gifts you leave your loved ones. Many Fabric customers get life insurance to shield their loved ones from their final expenses, allowing them to focus on other financial priorities like day-to-day living expenses. That’s why we’ve crunched the numbers to help you compare some of your top options. If you want to make sure that they’re not stressed out by the cost of your final arrangements, you’ve got a few options when it comes to paying your own funeral expenses.

Using Term Life Insurance for Funeral Costs

If you’ve got loved ones who depend on you financially, term life insurance could be a good way to defray the price tag on your final expenses. Your loved ones can use the death benefit proceeds however they choose, including for your funeral, flowers, burial or whatever else they need.

Term life insurance is one of the most affordable types of life insurance and may offer a larger death benefit than you can comfortably save on your own, making it the best choice for some families.

If the only reason you want a policy is to cover final expenses, you might choose to opt for a low coverage amount.

“Usually with insurance companies, if the benefit amount is going to be less than $15,000, it’ll be processed quickly, but that still depends on a death certificate, which can take two to three weeks,” says Bob Arrington, president of Arrington Funeral Directors. “Sometimes insurance companies can take 30 days to get the family those funds.”

That said, most people get term life insurance for more than simply funeral costs. A main reason to get life insurance is if you’re a parent or have any financial dependents. Your beneficiary can use a life insurance benefit for anything, including living expenses, debt repayment, college tuition and more.

If you don’t have any financial dependents and want only to cover the costs of your funeral, you may come across a specific kind of insurance called final expense insurance. This kind of policy is designed for funeral and similar costs. Despite the name, life insurance beneficiaries can use the payout for whatever expenses they choose. Final expense insurance is basically another form of term life insurance, with coverage scaled for estimated funeral expenses (policies typically only offer $5,000 to $25,000).

Similarly, seniors looking for life insurance may find policies geared toward them in the form of guaranteed issue permanent life insurance (meaning no health exam required and the coverage will last your whole life as long as you keep up with premiums).

Prepaid Funeral Plans

“The quickest way to make funds available is to prefund at the funeral home itself,” says Arrington. Most funeral homes across the country will let you set up a pre-need arrangement, or a prepaid funeral plan. This is a way to earmark funds for funeral costs by putting them in the funeral director’s hands ahead of time.

“Those funds are usually accessible within 24 to 48 hours. All the funeral home would have to do is have a copy of that policy,” Arrington says.

Pre-need funds are fast, but limited. You can’t transfer funds to another funeral home, so you’re committing to that location. You also can’t use the money for any other purpose.

Bank Account to Cover Funeral Expenses

The simplest (although not necessarily easiest) way to pay your final expenses is by “self-insuring” or simply saving up the actual cash in a bank account.

If you’re able to save the money in a joint account with a loved one, or designate someone as the beneficiary of your bank account, then the funds may be available for your loved one immediately or shortly after you pass away.

Of course, this depends on your ability to save $10,000 or so, which can be challenging. If you open a joint account, you’d also have to trust the other account holder not to touch the money.

If you’re the sole owner of the account, banks can be a little slow to transfer funds to your loved ones. Arrington says that 30 to 60 days is a typical turnaround time for a bank to release the funds upon someone’s death, and your family would first need to collect death certificates and other necessary financial documentation before the bank could do so.

That means they’d probably have to front the costs and get paid back later, so it’d likely be most convenient if the person taking care of your funeral is the co-owner of the bank account in question.

Of course, if saving this much in cash feels out of reach for you, life insurance may be a surprisingly inexpensive way to provide for those you love. A 30-year-old woman in Texas in excellent health (who isn’t a smoker) could get $100,000 in life insurance coverage for 20 years for less than $15—it’d cost $14.96, according to a life insurance quote with Fabric.

How Much Are The Typical Funeral Expenses?

Similar to a happier event like a wedding, funeral expenses depend on how elaborate your plans are. The National Funeral Directors Association estimated a total cost of $7,360 for a viewing and funeral without a vault, and $8,508 with a vault (vaults are required by most cemeteries) in 2017.

By comparison, a typical cremation costs $500 to $3,000.

Final arrangements are a personal choice, subject to tradition, religion, cost and more. The number of people choosing cremation may be on the rise, but burial still remains popular—and expensive.

If you’d like a traditional funeral and burial, expenses might break down like this:

• $2,100: Funeral director basic services fee, which covers meetings, overhead, filing for certificates and other administrative tasks; several states legally require the bereaved to hire a funeral director to handle certain aspects of the funeral

• $325: Transfer to funeral home

• $725: Embalming

• $250: Other preparations of the body

• $425: Use of facility for viewing

• $500: Use of facility for funeral service

• $325: Hearse

• $150: Service car or van

• $160: Basic memorial package

• $2,400: Metal casket

• $1,395: Burial vault

• Grave plot (typically $200 to $2,000 in a public cemetery, and $2,000 to $5,000 in a private cemetery, although some regions may charge much more)

• Grave opening and closing fee ($300 to $1,000)

Other costs may increase the total price as well, including flowers, officiant and musician’s fees, the grave marker and extra copies of the death certificate.

Some sources estimate that (traditional) final arrangements often cost closer to $10,000 once you factor in these added expenses.

If a traditional funeral sounds most meaningful but cost is an issue, you can take steps to minimize expenses. Skipping embalming or other unnecessary steps is an option, as is asking funeral directors for written price lists, since there may be cheaper vaults or caskets available than the models on display.

You’re also legally entitled to purchase your own casket elsewhere. Finally, opting for cremation with a traditional-style memorial service is less expensive than funeral with burial.

Planning for Your Wishes

Your last wishes can be a personal, highly sensitive matter. Your religious, emotional or even environmental convictions may lead you to consider non-traditional avenues for final arrangements. Whether you have a funeral (service with your body present), memorial (service without a body) or neither of those things is up to you.

Here are some examples of alternative wishes you might outline in your last will and testament:

• A green burial, which minimizes environmental impact, is often a cheaper option than traditional burial because it eliminates many steps, like embalming or purchasing a vault. If you want to be buried in a designated “green cemetery,” it may be helpful to figure out the details yourself so your loved ones aren’t paralyzed by research when the time comes.

• Burial at your home is allowed in most of the United States (Arkansas, California, Indiana, Louisiana and Washington don’t allow home burial in most circumstances). Your property may have to meet a minimum acreage, and you may need to discuss certain aspects of your plan (like where on the property you’ll be buried) with city planners. Consider who will handle this and when.

• If you’re interested in alternative methods of handling your remains, like having your ashes mixed into a memorial reef (costs range around $3,000 to $7,500) or made into a diamond ($750 to $20,000), make those instructions clear.

Music, Memorials and More: Choosing Your Funeral Program

Including your wishes in your will is good, but your will shouldn’t be the only document expressing those desires. Your family may not read your will until they’ve already handled final arrangements, according to Arrington.

(When you create a will with Fabric, we ask you about your wishes for your ceremony, and then deliver it to you as a separate document you can share with a religious officiant, funeral director or anyone else who should know about your wishes.)

Whether or not you create your will with Fabric, a document outlining your final wishes should include your preferences for:

• Particular wishes for your funeral program

• Burial vs. cremation vs. donating your body to science, or anything else

• Memorial preferences (where you want it, any particular guests you’d like to have invited, music, etc.)

• Do you want your guests to donate to charity instead of bringing flowers or gifts for your family?

• Anything special you’d like interred with you

• Where you want to be buried (or how you’d like your ashes disposed of or stored)

Leave copies of this document alongside your will and at your chosen funeral home, where your next of kin can find it. One way to keep your family members in the loop—if you’ve created a will with Fabric, at least—is to designate a trusted contact, or a person who can access your will and last wishes electronically.

Whether you go for life insurance or another means of funding your own final expenses, a loss is a uniquely painful event for a family to go through. While you can’t shoulder the emotional load for your loved ones, lessening the financial burden can be a way to care for your family as long as you possibly can.

Fabric exists to help young families master their money. Our articles abide by strict editorial standards.

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