Dealing with the death of a loved one is an emotionally painful experience that is only made worse by the necessity of funeral planning. Organizing a funeral can be stressful, especially when the costs start adding up. Luckily, you have several options for how to pay for a funeral.
Five ways you can pay for a funeral include using a prepaid funeral plan, paying via life insurance, asking for help or using allowable benefits, pulling funds from a savings or payable-on-death account, or taking out a loan.
I’ll discuss different methods in greater detail in the subsequent sections. So, if you’re worried about being able to afford a funeral and want to explore your options, keep reading.
Table of Contents
1. Use a Prepaid Funeral Plan
If the deceased made provisions for their funeral expenses before they died, it’s possible that they set aside money to pay for a funeral at the funeral home of their choice. Typical prepaid funeral plans range in cost from $10,000 – $25,000, and are paid for in monthly installments completed well before someone dies.
Prepaid funeral plans spare loved ones from having to make arrangements and suffer financial losses. For this reason, many people like to pay for them during their lifetimes. However, there are also some drawbacks associated with this method.
For one, there are risks associated with purchasing a prepaid funeral plan from a funeral home that isn’t reputable. If there isn’t a lot of oversight, unethical funeral homes can use the money in ways the departed didn’t agree to. Investigations by federal authorities have revealed alarming instances of embezzlement from some funeral homes.
There are also additional fees associated with purchasing a prepaid funeral plan. Some funeral homes charge both setup and maintenance fees. Overall, this can make a funeral more expensive than necessary.
Finally, if you prepay for a funeral at a certain funeral home and then change your mind about where you’d like to be buried, or if you die in a different state, you can lose the money you gave to the home.
The following table outlines the pros and cons of prepaid funeral homes more clearly:
| Pros | Cons |
| The decisions and costs of the funeral don’t fall on the surviving family. | It is possible that the prepaid plan you enrolled in is a scam, and you and your family will lose the money. |
| You can lock in a funeral price. | Most plans aren’t transferable, so if you move, you’ll either need to have your body transferred when you die, or you’ll need to purchase a new plan. |
| Some funeral homes offer cheaper packages if the funeral is paid for in advance. | There are often additional hidden fees that make the funeral more expensive than you had planned. |
| You get to determine what your funeral looks like and make decisions about your casket, plot, type of burial, and more. | Prepaid plans sometimes don’t cover all the costs of a funeral, leaving family members to pick up the tab for the remaining expenses. |
| Prepaid funeral plans can be written off using tax deductions in some cases. |
Conventional prepaid funeral packages typically include the following:
- Burial or cremation, depending on your preference
- Urn or casket
- Burial plot
- Headstone
You can stick with this basic plan, or you can upgrade with the following add-ons:
- Funeral service
- Visitation
- Transportation
- Obituary
- Funeral programs
- Reception at the funeral home
- Flowers
- Presenters
- Pallbearers
Many believe that prepaid funeral plans cover all costs, but this is not necessarily true. The following are typically not included in prepaid funeral packages:
- Death certificate copies
- Musicians
- Honoraria for clergy
If you are planning on a prepaid funeral plan, the most important thing is to choose a reliable and trustworthy funeral home to purchase your plan from. For more about this, check out my article on how to choose the right funeral home.
It is also important to know your rights before purchasing a prepaid plan, as some states have laws in place to protect you, and others don’t.
For example, the New York State Department of Health requires that funeral homes that go out of business return the money with interest to the purchaser of the prepaid plan. However, if the funeral home doesn’t notify the Health Department that they have gone out of business, your money may be tied up for a while.
When purchasing a plan, it is important to note the difference between a “guaranteed” and a “non-guaranteed” funeral. A guaranteed funeral means that the funeral home will provide the services they can with the money you gave them, and your estate will not have to pay anything extra.
A non-guaranteed funeral is one in which the home provides the services you selected in your plan, but they charge the current rates instead of what the rates were when you bought the plan. This often results in the funeral costs exceeding the amount of money in the plan. In this case, your estate will be charged for the difference.
2. Use Life Insurance.
Depending on the kind of insurance the departed signed up for, the beneficiaries listed in their policy can use some of the money from their insurance payout to cover funeral expenses.
Let’s take a look at some of the different insurance options and consider which of these might help you cover the funeral expenses of a departed family member.
- Term life insurance. The benefit from a term life insurance policy may not be paid immediately. So if you’re planning on using this kind of insurance to pay for a funeral, you may have to pay upfront and then get a reimbursem*nt from the insurance company later.
- Employee life insurance. Some companies offer life insurance as part of employment benefits, but these are sometimes withdrawn when you quit the job or retire. So you may or may not be able to use this kind of insurance to pay for the funeral depending on whether the departed still worked for the employer.
- Whole life insurance. These policies accrue cash value, and beneficiaries can get cash payouts, which they can use for the funeral. One type of whole life insurance is called final expense insurance, and this kind of policy is specifically dedicated to covering funeral costs.
Beneficiaries of a life insurance policy should always look into the details of expenses covered by the policy to determine what money they can receive to cover funeral costs.
3. Ask for Help or Use Allowable Benefits
Asking for help can be difficult, but many people and communities are willing to support those who have lost a loved one financially. Additionally, some government agencies have funding available to help those in need.
Here are some ideas for how to raise money to cover funeral costs:
- Host a fundraising event. You can sponsor an event to help raise the money you need to pay for a funeral. This could be a golf tournament, run or walk, theatrical or musical performance, barbecue, or anything you think people will pay to enjoy.
- Use a crowdfunding website. Online fundraising platforms are effective ways to collect money. So you can use websites such as GoFundMe.com to raise money for a funeral. This also gives people who cannot attend the funeral for whatever reason an opportunity to express their grief and contribute.
- Research the deceased’s employer and union. If the departed was employed or in a union at the time of their death, there might be benefits you can use to cover funeral costs.
- Seek help from the church. If the departed was a church member, ask the church if they’d be willing to help cover funeral costs. Many larger churches have funds set aside for these situations and are willing to help.
- Use veterans’ benefits. If the departed was a veteran of any of the armed forces, they may be eligible to be buried in a national cemetery at no charge for the grave, headstone, vault, and interment.
- Research victims’ assistance. Some states have victims’ assistance policies that help with the funeral expenses of accident or homicide victims. For example, Texas reimburses for funeral and burial services, transportation of the body, flowers, caskets, and urns for eligible parties.
If you don’t have the money to pay for a funeral on your own, don’t panic. Your friends, family, and community will likely want to help if you give them the opportunity to. Additionally, if you research different benefits available to you, you may find access to money you can use to cover costs.
4. Use Money From a Savings or Payable-on-Death Account
Some individuals and families choose to set up payable-on-death accounts. These accounts require a named beneficiary, and at the time of death of the account holder, everything in the account is passed over to the beneficiary.
This method helps avoid delays in resolving wills and other legal hurdles to gaining funds quickly, making it easier to find funds for conducting a funeral at short notice.
The most important part of setting up a payable-on-death account is to select trusted beneficiaries who will use the money appropriately.
Alternatively, you can put money aside for your funeral in a savings account, but it will have to go through probate, which will delay the payout.
Another option is to set up a joint account with whomever you want to handle your funeral, and when you die, they will become the sole owner of the joint account. They will also have access to all the money while you’re still alive, so you need to take care to pick someone you trust to handle your money.
5. Get a Loan
The last and least recommended option to conduct a funeral is to get a funeral loan from a bank, credit union, or specialized lender. However, these are personal loans, which can be difficult to get, especially if you don’t have a good credit score. Additionally, the interest rates on these loans are usually extremely high.
Ultimately, I recommend using one of the alternative methods in this article to raise money for a funeral instead of taking out a loan to pay. You can also try to lower your funeral expenses before you resort to getting a loan.
Here are some recommendations for how to make a funeral less expensive:
- Have your loved one cremated instead of buried.
- Opt for direct burial without embalming.
- Select an affordable casket (for advice, read my article on where to buy cheap coffins).
- Choose an affordable funeral home and funeral director.
- Select a cheaper headstone and a simple design with minimal engraving.
- Plan a simple funeral reception.
Read my article on budget tips to cut funeral costs for more guidance.
Who Pays for a Funeral?
The relatives of a deceased person cannot be legally forced to pay for a funeral. Typically, the costs of a funeral are covered by the deceased’s estate. Their estate includes their savings, property, and other assets they may own at the time of their death.
However, there are instances where the departed doesn’t have any assets, and their estate isn’t large enough to cover the costs of a funeral. At that point, the burden is on the executor or administrator of the estate, who is appointed in the deceased’s will.
If there is no will or no executor in the will, then a probate court will assign an appropriate person to take on the funeral responsibility. This is usually the closest living relative.
What Happens If You Can’t Pay for a Funeral?
If you can’t pay for a funeral, you’ll have to sign a release form with the county coroner’s office. Then, the county and the state will pay to either bury or cremate the body.
If you can’t come up with the money to pay for a funeral, the last option is to sign a release with the county coroner’s office. This release allows them to bury or cremate the body using the county and state money.
Some counties will allow the family to claim the deceased’s ashes after cremation, for a small fee. If no one claims the ashes, they will be buried in a common grave with other unclaimed ashes.
Conclusion
There are several options to explore when raising funds to cover funeral expenses. These include prepaid funeral plans, insurance, benefits, fundraising, and getting a loan.
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