Blog Archives for tag final arrangement planning
But I Have Whole Life Insurance To Pay For My Funeral…
Why is this NOT a good idea? I recently helped a gentleman who had, in good faith, taken out a whole life insurance policy to pay for his final expenses. So far, he has paid in over $18,000 (yes that is correct!). If he retained the policy, he would be required to pay the rest of his life. At age 81, that could be ten or more years. At $101 per month, or $1,212 per year, several thousand more dollars in premiums could be paid. And, did I mention that since he has paid since 1999, the cash value of the his insurance policy is a whopping $2,100? Additionally, when he dies, the death benefit pay-out is $5,000.
This is a sentiment expressed by many of my clients. They don’t want a fancy casket. They don’t want alot of money spent on their final arrangements. They want something very simple. They are from the “no frills” generation, who want to be respectful while being frugal.
If you have not pre-planned your funeral and made arrangements prior to death, it puts your loved ones in a bind. It can be a time bind. It can be a financial bind. If you have expressed to your loved ones that you want a simple final service, it is even more important for you to pre-plan than if you want to spend alot of money on your final arrangements.
Dying Is So Expensive!
So true. Today’s very average funeral in the Midwest region is about $7,000 to $10,000, not including burial space and a marker. So how can we decrease the expenses?
WHAT TO DO FIRST?
End-of-Life planning can be overwhelming and confusing. There is no such thing as a plan with only one component when it comes to end-of-life planning. We are also planning for the unknown. We do not know if we (or aging parents, spouses, etc.) will live to an old age, will be healthy or health impaired, will be able to live at home, will need assistance or full-time care…..how do we effectively plan for the unknown?
That is the question…..I saw it again this week. A sweet lady mistakenly thought that the only way she could pre-fund her funeral is to make small monthly payments, over a several year period, and pay interest for the “privilege” of setting aside her own money! WRONG! By using a Funeral Trust, you can make small monthly payments, over the number of years you choose, and RECEIVE interest, much like a savings account. You do NOT have to pay interest to a third party for the “privilege” of saving your OWN money for your OWN final arrangements!
One of the most common omissions that people make in their financial planning is to review their beneficiaries every year or so. Choose a specific date and make yourself a reminder, along with a list of your holdings and take the time for a review. If you have a financial advisor, review your beneficiaries with him/her. Make a list of all of your insurance policies, your bank accounts and your investments. Make sure that the person(s) listed as beneficiaries is still appropriate.