A funeral is an essential expenditure, and a little planning will eliminate the uncertainty of costs and payment. If you don't plan for funeral expenses, you run the risk of your family having to ask friends and relatives to share an unexpected financial burden, which can put everyone in an embarrassing and uncomfortable position. And if you borrow money, it has to be repaid.
Here are some options for financing funerals:
Pre-Need Insurance and Annuities
Pre-need insurance plans and annuities are designed to cover the expenses associated with your death and funeral. Both of these options are provided by life insurance companies that specialize in the funding of funerals. Because the monies are placed in a life insurance company these two options have many benefits that the other options listed below do not have. For reasons known only to the government lobbyist and our politicians the monies that can be put aside for funerals when using life insurance is basically unlimited. Whereas the monies placed in bank trusts and traditional life insurance products have limits place on them, especially when families are applying for medical assistance. For the specific limitations feel free to contact us.
Traditional Life Insurance
A traditional life insurance policy can meet several needs--pay off loans, fund education costs, and provide for living expenses, as well as funeral expenses. But remember that if you are applying for medical assistance limitations exist.
Bank or Funeral Trust
A funeral trust is similar to a savings plan. The earnings on funeral bank trust funds are taxed every year, and paid either by the family or by the trust itself.
Beware with this strategy. A long illness can easily deplete short-term savings, while taxes and early withdrawal penalties can reduce long-term savings.
For more information on funeral pre-planning and pre-funding, contact us.