Two modern forums for information and opinion exchange are sites like Reddit and Quora. Not surprisingly, these two platforms contain lively discussions regarding funerals, funeral homes, and the options offered to people for how to pay for a funeral.
There is significant confusion and skepticism shown in the threads and discussions on Reddit and Quora about the best way to pay for a funeral in advance. Users on both sites are actively seeking to understand the pros and cons of different financial products. The threads also show that users often grapple with the terminology, costs, benefits, and potential pitfalls of funeral insurance policies.
Legacy of Love scanned Reddit and Quora for tough questions that frequently occur so we can reply and clarify 3 of the most common.
This is the most contentious and frequently debated topic with sharply divided opinions, with many Reddit and Quora users sharing both positive and negative personal experiences.
As a nationwide, independent funeral planning service, Legacy of Love certainly understands why the question is contentious. A handful of unscrupulous funeral providers and the use of high-pressure, questionable sales tactics when the customer is at their most vulnerable can create the negative experiences described in the threads.
Our approach is different. Legacy of Love provides a fresh, modern approach to funeral planning and funeral insurance purchasing. Instead of facing the pressure of visiting a funeral home, our transparent process starts online from the comfort of your own home. You can conveniently comparison shop plans and services from multiple funeral providers near you. If you have questions, you can connect with one of our local counselors as much or as little as you need to complete your free funeral plan.
Now, we can answer your question: Yes, burial insurance (or final expense insurance) can be a good idea:
Is Burial Insurance a "Scam"?
Pre-need insurance or burial insurance policies from Legacy of Love avoid the "scam" label because you are not naming your chosen funeral home as the beneficiary. Your spouse or another family member are typically chosen as the beneficiary. Pre-funding your funeral this way helps you avoid losing your prepaid funeral home plan funds if the funeral provider goes out of business. If you decide to move, you aren't scammed out of your money by being locked into a contract with a local funeral home. If there any funds left over from the policy benefit, they are not secretly kept by the funeral home. They stay with the beneficiary and can be disbursed amongst family.
Another way to avoid the "scam" label is to consider adding on a neutral, expert advocate via our funeral concierge service. The best-in-class funeral concierge's expertise includes reviewing your selected funeral home services to ensure you're not being overcharged, and helping you with industry discounts available specifically to them.
Burial insurance is a good idea if you don't have the money readily available in a savings account, don't have sufficient life insurance coverage to also cover funeral costs, can't qualify for a term life insurance policy due to pre-existing health conditions, or simply want funeral funds to be quickly available after you pass. Burial insurance is not a "scam" if you work with reputable, transparent providers who avoid high pressure sales tactics. Consulting with a neutral, knowledgeable advocate like a funeral concierge can help ensure you avoid being scammed as you plan and fund your funeral.
No, it's not too late.
In fact, you've stated the two primary reasons why pre-need or burial insurance are good options:
As long as your elderly / sick parents are current with their burial insurance policy payments - and they are beyond the 2 year waiting period - the policy will pay the full benefit upon their passing. If they pass within 2 years of purchasing the policy, all of their payments are paid back with an interest rate of 4% - 10% on that money. Since the returned payments are treated like a policy benefit payout, the funds plus accumulated interest are tax-free to the beneficiary and are typically paid out within 48 hours avoiding the delay of probate.
In these particular age or declining health scenarios, burial insurance can provide a timely and important alternative your elderly / sick parents can exercise so that their funeral is paid for without burdening your family.
Simple math and the laws of compounding interest over time make this answer simple: It boils down to time.
As finance expert Dave Ramsey says, if you are in your 30s or 40s and can afford to regularly contribute to a savings or investment account dedicated to paying your funeral expenses, then that account could easily meet and surpass the $8,300 median average cost for a funeral. Financial experts like Suze Orman recommend considering a Payable-Upon-Death (POD) savings account which lets you name an account beneficiary. This type of account avoids the delay of probate. Upon your passing, the funds become immediately available to the account beneficiary. Prior to that, the beneficiary has no rights to the POD account.
But, what if these conditions apply to your situation?:
These scenarios are all compelling reasons to consider buying a pre-need insurance or burial insurance policy.
Pre-Need Insurance Policy
A pre-need insurance policy is typically associated with a funeral plan. You pre-plan your funeral for free with Legacy of Love, identify the costs associated with your plan, and purchase a pre-need policy that pre-funds your plan while locking in today's prices. If you develop your plan with a funeral home, they are typically named as the policy beneficiary. Consumer advocates like Clark Howard caution against this approach citing the risk of the funeral provider going out of business, or the lack of portability if you elect to move away from your local funeral home.
This is where a pre-need insurance policy with your free Legacy of Love funeral plan stands out. You can name your spouse or family member as the beneficiary, not a funeral home. If the funeral provider selected in your plan goes out of business, you simply choose another funeral home. Our pre-need insurance policy gives you portability in case you need to move. The beneficiary is not your local funeral home, so the policy benefit goes wherever you go.
Policy payments can be stretched out over 3, 5, or 10 years to keep them affordable. As long as your policy payments are current and you're beyond the 2 year waiting period, if you pass away during that time span, the policy pays out in full. Policy proceeds normally pay out in 48 hours or less making funds available to family well before probate might settle an estate.
Burial Insurance Policy
Burial insurance - also known as final expense insurance - can not only be used for funeral expenses, your beneficiary can also use the proceeds to pay for your medical expenses, debts, or any other purpose. Since the benefit amount is usually less than $50,000, a full medical exam is typically not required. Policy approval is usually quicker - and could be same-day in some situations.
It can be better to put your money into a savings account to pay for your funeral if you are young enough to allow compounding to work for you and produce a sufficient amount. However, if you haven't saved, can't save, aren't insurable due to health conditions, or don't want to burden family with figuring out how to pay for your funeral; then buying a pre-need or burial insurance policy can be a prudent move.
Have we addressed your skepticism and helped answer your contentious questions about burial insurance? If so, you can start your free funeral plan, call Legacy of Love now at 833-888-0355 or fill out our online form and we'll respond right away.
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