When people think of final expense, they often think of funeral costs. However, there are other things that should be considered when thinking about final expenses. There could be medical expenses that need to be taken care of due to illness or a hospital stay, outstanding debts that don't disappear when you die, and potential tax liabilities.
As it turns out, final expenses are pretty expensive. That's why it's a good idea to have a plan to pay for them as much as possible, so that your loved ones aren't left with a bill. Here are some options:
If you are financially prepared and have the money you need for retirement to meet your personal obligations, and are able to fund your final expenses, you may wish to self-fund and insurance may not be needed. However, if something happens and you use these funds for other needs (such as nursing home or hospice) your survivors may end up without the means to meet your final expense needs.
Pre-need insurance is a type of permanent life insurance offered by funeral homes. It’s essentially a very specific type of final expense insurance, which covers the costs of pre-determined services. One of the benefits is that you’ll get all of your funeral concerns out of the way early, know what it’ll cost, and know how you’re going to pay for it. However, setting up these plans so far in advance comes with its own risks, as a lot can change in the interim. For example, a funeral home changing ownership and you won’t have that premium money to use for other purposes.
Pre-need Funeral Trust
A pre-need funeral trust serves the same purpose as pre-need insurance. It is money to be used specifically for funeral expenses, but rather than the funeral home waiting for the insurance policy to pay out, you contribute to a trust that accrues interest over time. These can be a cost-effective way to fund your funeral, but the interest is typically taxable, they’re irrevocable so they’re difficult to modify, and holds similar risk as the pre-need insurance.
Life insurance is a smart investment to make when planning for final expenses. Compared to the above options, you have the advantage of a safe, tax-free death benefit that will go to your beneficiary. Your beneficiary can then use it to take care of any outstanding debts, medical bills, and funeral plans. Western Fraternal provides you with many options, including Whole Life, Simplified Issue Whole life, or Graded Whole Life. Depending on your need and budget, your agent will help determine which option is right for you.
The bottom line is that there are many final expenses to consider. It is important to make sure all of your needs are covered. To determine what is best for your situation, we recommend you contact your Western Fraternal agent or call us at 877-935-2467.
CLU, CRPC, CLTC Sales and Marketing Manager
Call 877-935-2467 to speak with a Western Fraternal Life Representative.