Determining the Costs of Buying a Final Expense Insurance Policy

Determining the Costs of Buying a Final Expense Insurance Policy

The funeral costs are rising across the US, keeping pace with inflation. As per stats, a funeral’s median cost in 2019 if you availed viewing and burial services were around $9,135 with a vault. A final expense policy would cover these costs for your family members ensuring they focus on performing the rites rather than dealing with bills. But most people aren’t aware of how much they should invest in these insurance policies. 

Hence, experts like Gary P. Cubeta of Insurance for Final Expense come forth to explain how much is a unit of Colonial Penn life insurance? or any other insurance provider. In this article, you’ll learn about how to determine the exact cost when purchasing this policy.     

Calculate the Cost of Funeral

The first thing you should be doing is calculating the cost of your funeral. Find the amount your family members are expected to pay towards your final rites. This varies depending on what facilities and arrangements you want to be arranged for your funeral.

As per National Funeral Directors Association’s data, the average cost of a funeral stands at $8,755. But that doesn’t tell you anything about the things contributing to that cost. So you have to break it down to understand it better.

In a typical funeral with burial, you can expect the following cost (in approximate):

  • Funeral services fee – $2,000
  • Metal casket – $2,400
  • Vault – $1,395
  • Embalming cost – $730
  • Hearse – $325
  • Staff cost for viewing – $450
  • Staff cost for the ceremony – $500
  • Transfer of remains cost – $325
  • Service vehicle – $150
  • Decoration and printing – $200
  • Miscellaneous – $250

You get the total funeral cost by adding all of these expenses mentioned above. Funerals involving cremation costs even more. Your family members will need to pay more or less depending on how many services they have availed.

Other factors influencing the price are the location, material costs, and service provider. Therefore, you must get an accurate figure of your funeral cost.

Consider Inflation

Calculating your funeral cost isn’t enough. Consider the inflation and price rise too. Assuming that you’re in your 70s and expect to pass away not before turning 90, you need to plan for that 20-year gap because price changes every year. After 20 years, the cost of the services will be more, if not on par.

Experienced agents advise you to add 10-15% of the total funeral cost as inflation cost. So if your total funeral estimate is $10,000, you should add $1,000-1,500 as inflation cost.

To save money on unexpected inflation, you can make use of a pre-need life insurance policy. It is a type of funeral expense insurance policy where the money goes to the funeral service provider instead of your family members.

You essentially create a futures contract with the funeral service provider. So you estimate a price and pay the premium to the insurance carrier. When you pass away, the face value will be transferred to the funeral service provider. They will be bound to carry out the proceedings at the set price even if they bear an extra cost. So your family won’t have to pay anything extra.

Factors that Determine Final Expense Insurance Cost

When calculating the final expense insurance cost, you need to consider other factors apart from the funeral cost. The primary influencing factors are:

  • Age

Age matters more than any other factor for final expense insurance. As a rule, the younger you are, the less premium you’re likely to pay. That’s because you’d have more time to pay all of your premiums. It’s also highly likely that you’ll be financially stable. If you’re old and in your 80s, then the insurance carrier will charge you more because they’re undertaking more risk to provide the coverage.

  • Medical History

Next, the insurance agent will determine your medical history and current condition. Although this is not a determining factor for your eligibility, it does influence the premium cost. 

If you have a life-threatening disease, then you’d be asked to pay more premiums. If you’re fit and healthy, expect a lesser cost.

  • Gender

Gender also plays a role in the premium cost. If you’re a female, you may end up paying fewer premiums than if you’re a male.

  • Guaranteed or Simplified Issue

Guaranteed issue plans cost more than simplified issues. So consult with your insurance agent on which one to pick for your case.

Last but not least, the premium will vary depending on the carrier. Some carriers charge more than others for providing the same coverage. Therefore, if you don’t know how much is a unit of Colonial Penn life insurance yet, avail the details from experts like Gary P. Cubeta of Insurance for Final Expense. They offer rate charts to all clients when selecting the package.

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