How Families Can Avoid Unexpected Funeral Expenses
Did you know the average funeral in the U.S. can cost up to $9,000?
Grief came with a shocking financial burden for Atlanta, Ga. native Sal El, 34, whose family struggled to cover the costs of his grandmother’s funeral when she died unexpectedly of ovarian cancer in 2008.
Money was the last thing Sal El wanted to think about while he was mourning the loss of his grandmother, but it quickly became the focus.
El’s family assumed his grandmother, who was 65 when she died, had life insurance. But they were wrong, and wound up having to pool their own money to cover the cost of her $13,000 funeral. For El, that meant putting aside $300 from his paychecks at Game Stop GME, -0.54% where he was making $11 an hour selling video games.
“It taught me you don’t want to be in a position where you’re not insured,” El said. He and his husband made sure to each get their own policy before they even got married in 2017.
“Me and my husband have $2.5 million on each of us,” El said. “We both have an Accelerated Death Benefit attached, which means if you are diagnosed with a terminal illness or a chronic illness the insurance company will pay out 75% of the policy while you’re still living,” he said.
The policy costs $125 a month for a 30-year term, and his partner’s policy costs $145 a month for the same amount of time.
El’s grandmother’s funeral totaled slightly more than the average funeral cost in the U.S., which is between $7,000 and $9,000. That includes viewing, burial and basic service fees like transporting remains to a funeral home, a casket and embalming, according to the most recent statistics from life insurance company Lincoln Heritage.
The average funeral cost estimates do not include a cemetery plot, tombstone or other preparations like flowers. This can be especially challenging for many families, considering nearly six in 10 Americans don’t have enough savings for a medical, or even an automobile, emergency.
Currently, the median cost of a funeral is $7,360, according to the National Funeral Directors Association. Cremation is significantly less — between $6,000 and $7,000, according to the same report.
Caskets and urns alone can cost thousands of dollars depending on the material used. The price of a casket, for example, runs between $2,000 and $5,000 on average for those that are made of metal or cheaper wood, though some caskets can sell for as much as $10,000 or more when they’re made of more expensive materials.
There are ways to save money
You don’t have to buy funeral items directly from a funeral home. In fact, purchasing items like caskets and urns from outside retailers can save families thousands of dollars. A casket at Costco, COST, +0.04% for example, can cost as little as $899, and urns start at $89.99.
Caskets from Walmart WMT, +0.02% range in price from more than $1,000 to nearly $4,000. And the lowest prices for caskets can be found on AmazonAMZN, -0.05% with options at $791 with free shipping through Amazon Prime.
A lack of transparency around pricing is another hurdle. A new San Francisco-based startup called Ever Loved is addressing the lack of transparency. It makes it easy for families to compare prices for funeral homes, cemeteries, caskets, urns and headstones in addition to creating a memorial.
People who have lost loved ones are thrown into a “high-pressured situation where they have to plan a funeral and spend thousands of dollars when they’re experiencing shock and grief,” Alison Johnston, co-founder of Ever Loved, said.
“We started Ever Loved as a goal to help people navigate the funeral process,” she added. “Someone passes away and people have very little knowledge about what they should do and how much they expect things should cost.”
The site, Johnston said, was inspired by her own difficult experience understanding and comparing price options when her grandmother was diagnosed with terminal cancer.
The Federal Trade Commission implemented the Funeral Rule in 1984, giving consumers the right to choose only the goods and services they want or need so that people can compare prices among funeral homes instead of having to accept a package that may include unwanted items. In 1994, there was an amendment to that rule forbidding funeral homes from charging a handling fee so consumers don’t get charged extra for bringing in their own caskets from a third party retailer.
There is no requirement by law for a funeral provider to list its prices online. This can lead to people getting overcharged at the funeral home.
“There’s only one reason for that: They don’t want the competition or the price pressure,” said Josh Slocum, executive director of the Funeral Consumers Alliance, a nonprofit dedicated to protecting people’s rights to a meaningful, dignified and affordable funeral.
Some funeral providers skirt the rule of having an itemized list by placing it in the back of a book after the list of funeral packages, Slocum said. “You’ll get a price list that’s 20 pages long and the first 10 pages are all packages and its not until page 11 that you’ll see the itemized breakdown,” Slocum said.
Some funeral providers still fail to give customers an itemized list, despite being required to do so, NPR reported in 2017.
One of the best ways to avoid getting stuck with an unexpected funeral bill is to have adequate insurance. Insurance experts encourage young couples and families to take out a life insurance policy if they can afford to as soon as they can.
“As a general rule of thumb, anybody who has a stable income can sign up anywhere from age 25 or above,” said Nelson Lee, a managing partner at PacWealth Solutions, an Irvine, California-based financial planning firm.
“For a $200,000 policy for, say, a healthy 35-year-old, that’s likely not going to cost anymore than $20,000 over the course of 20 years. That’d be just $1,000 a year.
“It doesn’t expire and if you live a long life you get to take some out and spend it,” Lee explained. “We can’t quantify the emotional loss of a loved one, but being financially prepared can take off some of the stress.”
Have you made arrangements for when the inevitable happens?