Alternative Ways to Pay for a Funeral

by M-Gillies
file folders holding important documents for your estate and funeral plans

Insurance policies, Veterans’ Benefits, Social Security and more may be able to provide funding to pay for your funeral.

In one average person’s lifetime there will be three major expenses made. The first is a vehicle; the second a house and the third will be a funeral. But while vehicles and houses are paid over the course of a person’s lifetime, a funeral is a one-time expense that comes up without warning and generally when we least expect it. While it can be difficult to prepare oneself for the expense a funeral will cost, below are just some of the ways you can prepare yourself for the unexpected:

The Deceased’s Own Resources: In some cases, it is important to consult the deceased’s bank in order to ascertain whether or not they had made provisions for their funeral expenses. The important thing to ask is whether or not there is an insurance policy covering expenses, whether there is a savings account with a named beneficiary or another resource similar to a Payable On Death (POD). It is further important to consult local funeral homes to confirm whether or not a funeral home has already been selected with a pre-paid service.

Death Benefits: While the name may sound slightly macabre, these benefits can stem directly from pensions, societies and other organizations, with which an individual may have been affiliated.

Veterans’ Funeral Benefits: For anyone serving in the military, all veterans are entitled to burial in a national cemetery with both a grave marker and a flag, along with the entitlement of having one’s spouse(s) and dependents buried in a national cemetery. Expenses for opening/closing the grave, a vault or liner and setting the marker is covered as part of the military service expense. However, depending on the circumstances, a family will be responsible for any additional expenses including transportation to the cemetery.

Social Security Survivor’s Benefit: Social security death benefit is a one-time, lump-sum payment of a set amount that is only offered upon the death of a person who has worked long enough to be insured under Social Security. This payment is payable to a surviving spouse, or in the case in which there is no surviving spouse, a child who is eligible for benefits on the deceased person’s record in the month of death. This fund cannot be paid to a funeral home or estate for funeral expenses, but can only be collected as stipulated above.

According to the official website of the US Social Security Administration, the payable amount is $255. Survivors must apply for this payment within two years of the date of death.

The Totten Trust: Also known as a Payable on Death account, a Totten Trust is a form of trust in which one person places money into a bank account with instructions that upon the death of the depositor, the contents of the account will pass to a named beneficiary.

Further, the monies or securities deposited in this particular account are not subject to the probate process, as the deposit is insured under the FDIC regulations. Additionally, this means the trust’s beneficiary has no ability to gain access to the bank account until the depositor’s death.

Pre-need Funeral Insurance: The concept that pre-need funeral insurance follows is a formula that has been used for many years, dating as far back as Ancient Rome when Burial Clubs offered club members an opportunity to pay a weekly fee to ensure funeral expenses. Now, with an update, pre-need funeral insurance is similar to that old concept, in which a member of the family pays a monthly fee annually over a fixed period of time, while collecting interest, so that when the unfortunate does occur, the funds for paying for a funeral will be taken from the pre-need funeral insurance.

Insurance Death Benefits: This is the amount on a life insurance policy of pension that is payable to the beneficiary when the annuitant passes away. Further known as survivor benefit it is a death benefit that takes a percentage of the annuitant’s pension. What this means is a beneficiary may be entitled to a percentage of the annuitant’s monthly pension. In some cases, the benefit may be issued in a large lump-sum payment from a life insurance policy, depending on the size and structure of the payment, as determined by the type of policy the annuitant held at the time of death.

Crime Victims’ Compensation Fund: A Crime Victims’ Fund often provides funeral benefits in instances where an individual is a victim of violent crime and suffered personal bodily injury; are a relative of a victim and require counseling to better assist a victim with recovery; are a spouse, child or other dependent of the victim who has died as a direct result of a crime, or someone for whom you assumed financial obligations as a result of the victim’s death.

This compensation is only eligible to individuals who reported the incident within 48 hours to the proper law enforcement agency, filed the compensation claim within two years of the crime or discovery of the crime, and have incurred medical expenses and lost time from work, or incurred no medical bills, but lost at least two weeks’ wages.

For example, if the crime had been committed in Missouri, and depending on the case, victims’ compensation may be available for medical care, psychiatric treatment or other counseling, funeral expenses, and wage loss reimbursement, with a total not exceeding $25,000.

While these are simple suggestions as to the alternative means for funding a funeral, it is important to speak with your local funeral director to determine what options are available and best for you.

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