Two ways to plan for final costs
Some people plan to pay for their funeral from savings. Others buy a final expense policy. Both can work, and the right choice depends on how much you have set aside, how long it might take to build more, and how you feel about paying premiums for life.
Savings are flexible. The money is yours, and your family can use it for anything. The risk is that savings get used for other needs, like a home repair or a medical bill, before the funeral comes. A policy works differently. It pays a set face amount to your beneficiary, as long as premiums are paid.
How a final expense policy works
Final expense insurance is a smaller whole life policy meant for funeral costs and final bills. Premiums are usually level, set at the start and not going up, and the coverage doesn't expire as long as they are paid. The beneficiary decides how to use the benefit.
The type of plan matters. If you qualify for a level benefit plan, the full benefit is usually paid from the first day. Graded or modified plans reduce the benefit for natural death in the first two or three years. Guaranteed issue plans ask no health questions but usually pay a limited benefit for natural death in the first two years.
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The honest trade-offs
Neither choice is right for everyone. Here is how they compare in plain terms.
- A policy can pay its full benefit soon after you buy it, if you qualify for a level plan.
- Depending on how long you live, total premiums may come to more or less than the face amount.
- Coverage depends on keeping up with premiums.
- Savings stay flexible, but may run short or be used for other things.
Deciding how much you need
Whether you save or insure, it helps to have a goal. The National Funeral Directors Association's 2023 General Price List Study put the national median cost of a funeral with viewing and burial at $8,300, and with viewing and cremation at $6,280. Those medians don't include cemetery, plot, monument or marker costs. If you have some savings, a smaller policy may cover the rest.
Comparing plans from Minnesota
If you'd like to see what a policy would cost, the call is a simple way to find out. The agent asks your age, the health questions and how much you'd like to cover, including any amount you plan to pay from savings, then compares quotes from several insurers. You can apply by phone if it makes sense. The quote is free, and there's no obligation.
There's no pressure to choose a policy over savings. Eterna is an independent insurance agency, and its licensed agents simply help Minnesota residents see plans from several insurers side by side. If you do go ahead, the insurer you choose issues the policy. Plans, prices and availability vary by state, insurer, age and health. Calls are taken every day, 8am to 8pm Central time.
The Minnesota Department of Commerce, at https://mn.gov/commerce/, is the state office that licenses insurance agents and regulates insurers. You can use it to look up an agent's license or to ask a question or make a complaint about insurance.
