Preparing for Funeral Costs to Prevent Debt

During emotionally trying times, money is often the last thing on your mind. Unfortunately, companies that make their money from funeral-related expenses know this, and they can take advantage of your vulnerable state to get you to pay thousands of dollars more than you need to.

We know it’s an uncomfortable topic. But because of the extremely high cost, it’s best to talk about it before it becomes a necessity. Debt.com surveyed more than 1,000 Americans on that very topic. More than half (55%) of respondents said they "would take on debt for family member's funeral."

Having a plan can even make you – and your whole family – feel more secure.

How much does a funeral cost?

According to Parting.com, a comparison site for funeral homes in the United States, the average funeral can cost around $9,000. Funeral pricing can be a source of financial strain, especially if the death is unexpected. Here’s how average funeral costs break down:

• fee for the funeral director's services: $1,500
• cost for a casket: $2,300
• embalming: $500
• cost for using the funeral home for the actual funeral service: $500
• cost of a grave site: $1,000
• cost to dig the grave: $600
• cost of a grave liner or outer burial container: $1,000
• cost of a headstone: $1,500

Do these numbers seem overwhelming? If so, you aren’t the only one who feels that way. Funeral loans may provide a way for you to get financing to cover the costs, but there are pros and cons to consider.

Deciding on a funeral loan

Taking out a personal loan to cover the cost of a loved one’s funeral is an option for those who can’t handle the expense. However, if you do want to take out a loan, you will have to qualify first. Qualifying credit scores vary by lender. Also, keep the interest rate in mind when signing on for a personal loan to cover funeral costs. If the interest rate is high, you could end up paying way more than you can afford.

Many Americans have taken debt for a funeral through funeral loans, personal loans, and credit cards. Nearly 1 in 4 respondents to Debt.com's Death and Debt survey said they've taken out either a personal loan or a loan specifically marketed through the funeral industry.

Those high interest loans can lead to greater financial troubles long after your loved ones are gone.

Let’s say you take out a 36-month to cover the $9,000 average cost of a funeral at 10% APR. The monthly payments would be $290.40 and total interest charges would be over $1,450. If you increased the term to 60 months, the monthly payment would drop to $191.22, but you’d pay almost $2,500 in interest charges.

If you’re thinking of going this way to cover funeral costs, make sure to consider the total cost and impact of the monthly payments on your budget.

Check out Debt.com's Death and Debt section covering funeral costs »

Life insurance

Some types of life insurance cover burial and/or funeral costs. If the deceased had this type of insurance, this could help your family manage the price of their funeral.

Help with funeral costs

The Federal Government provides assistance with funeral costs in special cases. Here are some examples:

• The Social Security Administration sometimes provides a one-time, lump-sum payment upon someone’s death. This is only valued at $255.
• The Veterans Administration can help with the funeral costs of a veteran. For non-service-related deaths, your family could get $300 toward the funeral. For service-related deaths, you could receive $2,000.
• The Federal Emergency Management Agency can help with funeral costs if the death is a direct cause of a natural disaster.
• The National Center for Victims of Crime can provide between $10,000 and $100,000 for funerals for victims of crime.

It all adds up. Our survey respondents have taken on up to $1,000 in debt for a loved one's funeral.

Starting the discussion with your family members

The first step to avoid funeral-related debt is to talk with your family members sooner rather than later. If you have an aging or chronically ill loved one, sit down and talk with them about how you and your family can honor their wishes after their death. What do they want to happen to their body? Are there specific religious rites they want you to follow? Do they have any money set aside for their own funeral arrangements? These are all important questions to ask to make sure you fully understand what your loved one wants and what you should expect to pay for.

Preparing a funeral checklist

Funeral checklists and costs will vary from family to family. Either way, it’s vital to have a list that clearly states everything the person in question will want and need. Here are a few topics to get you started:

Pickup of body

How will you get the body of the deceased from one place to another? Especially if your loved one dies at home, having a plan to move the body quickly is essential.

Funeral home

Working with a funeral home is one of the most expensive parts of this process. Before death, you can collaborate with your loved one to find a funeral home that suits their preferences and your family’s budget. After a loved one passes away, it can be stressful to try to shop around – especially if you are still in custody of the body. However, if you take your time and comparison shop among your local funeral homes, you can save more money in the end.

Memorial services

Some funeral homes offer their own memorial/funeral services, or you can plan your own somewhere else, like a community center. Planning your own is often cheaper than the high rates for minimal services at funeral homes.

Burial or cremation

Did the deceased want to be buried or cremated? The average cost of cremation is usually cheaper than burial costs, but burial is customary in many religions. It all depends on what the deceased wanted and/or what your family wants now.

Embalming

For viewings and visitations, you can have the body embalmed to prevent any smells or decomposition. This is expensive, but often necessary.

Casket

Caskets can be even more expensive than the actual funeral services. For those who planned their own funeral arrangements before death, a casket may have already been chosen. If not, you will have to make the choice and decide which price works with your family’s budget.

Traditionally, caskets were only sold by funeral homes. Now, there are many different ways to buy one. You can even shop online to find the best deal.

Plot/mausoleum

If your loved one doesn’t have a plot or mausoleum spot reserved in a cemetery, this is a cost you will have to cover. You will also have to choose the location of the burial within the cemetery.

Grave liner

Grave liners and burial vaults protect the casket from caving in over time. If this is a concern, investing in one of these items should be considered.

Grave marker

How will the grave be marked? Headstones and monuments come at a wide variety of price points. Like caskets, some people choose the marker they want before they die. For others, you will have to select the marker yourself.

For a more extensive funeral checklist, check out this version from the Federal Trade Commission.