I have been looking into funeral insurance for the first time this past week. Lets’ take a look at the pros and cons of a funeral insurance policy and see if it is right for you.

Funeral Insurance is Convenient

Funeral insurance can be useful since it does provide a number of benefits. It can be great to have because it will take care of all of the costs associated with the planning of a funeral and burial. It allows you to have all of the arrangements taken care of in advance with the funeral home and the cemetery. This allows loved ones to grieve without having to come up with money to pay for a burial.

Funeral Insurance is Expensive

One of the problems with funeral insurance is the cost. Although the payments for funeral insurance are low, they quickly add up over time. You could wind up spending a whole lot more money for the policy than the actual cost of a funeral. If you are a disciplined saver, then you could use the money that you would pay for funeral insurance to fund a savings account for the costs instead. If you don’t die unexpectedly early, this self-funded funeral account could end up saving you hundreds or thousands of dollars and your loved ones still would be able to cover the funeral costs.

Funeral Insurance has Hidden Fees

You have to be sure to read the fine print with any funeral insurance policy. These policies often contain hidden fees that can force you to pay a lot more money than you originally expected. You could pay off a policy and your beneficiaries may still be left with a fee for the policy to collect.

Funeral Insurance is Locked In

On the one hand, it is good that your plan is locked in once you have settled on a company since you will be covered, but it can also be bad because you will have a hard time making any changes. Policies do not transfer from one mortuary to another. Plans are also not usually refundable in any way, so you cannot get your money back if you change your mind on where you’d like to be interred. You might wind up wasting a lot of money if you decide to adjust the burial arrangements.

My Take on Funeral Insurance

Since my husband and I want to be cremated and don’t have a particular resting place in mind, funeral insurance is not a good idea for us. It is much cheaper to simply have $10,000 set aside for any cremation or wake costs that we will have to cover. A cremation runs about $3000 here in Houston, Texas, so $10,000 should be able to cover the cost of any cremation and gathering afterwards. We saved up our emergency fund over a year by simply paying ourselves $500 a month and a portion of any leftover money we had after paying the rest of our expenses. We actually continue to fund the account but usually take the excess over $10,000 and apply it towards our mortgage principal instead. After our home is paid off, we may allow that fund to grow indefinitely.

What do you think about funeral insurance?



Crystal Stemberger uses Budgeting in the Fun Stuff to write about finding the balance between paying your bills, saving for your future, and budgeting in the fun stuff along the way.