The truth is that we never want to think about death and dying or how we’ll pay for a loved one’s final arrangements after they pass on. But planning ahead and knowing your options might just save you, not just this holiday season but in those dark days when you’re grieving their loss.
If you’re wondering how to pay for a funeral, here are some of the most common ways:
- Pre-paid funerals
- A life insurance policy
- Cash or savings
- Retirement accounts
- Government benefits, including Veterans Affairs ( VA ) or Social Security
More about these options:
- Prepaid funerals
Pre-planning a funeral is a great way to ensure that your final wishes are fulfilled, no matter what your budget is. Typically, pre-paid funerals pay for themselves over time because you lock in today’s prices and eliminate inflationary costs.
Typically, pre-paid funerals involve paying for a funeral in advance; therefore, you can rest easy knowing that your final expenses will be covered. If the future becomes too difficult to predict, then perhaps you could end up saving yourself, not just this holiday season but many more down the road.
- A life insurance policy
If you have a life insurance policy, then it will pay for your final expenses after death – not only the funeral but also things like any outstanding debt, estate taxes, and probate fees. But if this isn’t the case, then there are other options to consider…
- Cash or savings
This option is simple. If you have the saved-up money to pay for your funeral, then it’s probably an easy choice. But if you’re considering this option, keep in mind that family members will need the cash soon after the death occurs. So whether it’s a bank account or other investments, they’ll need quick access to the funds.
- Retirement accounts
This option is simple: if you have a retirement account and it will survive beyond death ( i.e., life insurance or an annuity won’t pay out to heirs ) then your family could use that money to cover the costs of your final expenses after death, including funeral expenses. In fact, you can even name a beneficiary for your retirement accounts to ensure that the funds are passed on properly.
- Government benefits, including Veterans Affairs (VA) or Social Security
In some cases, a person’s funeral expenses might be covered by government benefits. For instance, if you’re receiving money from the VA then your family may be able to use that money to pay for your funeral expenses. And if you’re receiving Social Security payments, then your family may be able to receive the death benefit from the government before they even file a claim on your estate.