The dramatic shifts in the funeral industry in the last decade haven’t been all due to the Covid pandemic. Yes, it was a major catalyst for change, but many aspects of funeral services were already in transition.
The shift away from burial and the increase in direct cremation is a trend that is continuing. A large part of the reason is cost. For many Americans, paying for funeral services is difficult. Traditional burials cost $8,300, which exceeds what many people have in savings. The Federal Reserve determined that on average Americans have $8,000 in their savings account.
While most funeral homes require that services be paid in full up front, families in Texas at least have options for how they’ll cover the cost. Some options will reduce the expenses that the family has to cover, but others can involve interest and monthly premiums that increase the overall cost of the funeral services.
Comparing all of the payment options below is a good way to avoid paying more than you need to for direct cremation.
Cash
Paying cash is a realistic option for many people since direct cremation is typically $1,000 or less. But keep in mind for recording purposes, everything has to be in writing when cash is involved. The funeral home should generate an electronic receipt that can be downloaded to show the amount paid, when it was paid and the services the payment covers.
Check
Fewer businesses accept checks these days because the payment isn’t instantaneous or as secure. A check can bounce, meaning that the funeral home can’t cash it because the funds aren’t available. For that reason, many funeral homes won’t proceed with services until a check has been cashed.
Debit Card
Today the preferred alternative to a check is a debit card. The funds will pull from your bank account instantly so there’s no concern on the funeral home’s end. Most businesses can complete a debit card transaction over the phone, but if you aren’t comfortable sharing information in that way consider a direct deposit instead.
Direct Deposit/Bank Transfer
One of the easiest payment options is a direct deposit or bank transfer. Instead of providing credit card or debit card information you can send the funds to the funeral home’s bank account. It’s extremely convenient for families that are arranging long distance funeral services, there usually isn’t an associated fee and the funds are transferred immediately.
Estate Funds
If the deceased created an estate or had a last will and testament specifying how to pay for funeral services there’s a good chance they can be paid for using available funds. Funeral expenses are considered a priority claim, meaning they are paid first before other debts. However, it’s up to the executor to ensure that everything is done correctly and paid for by the estate.
Credit Cards
Many funeral services could easily exceed a person’s credit limit, but not direct cremation. And many funeral homes accept credit card payments.
The one big drawback to this payment method is the interest you pay if the full amount isn’t paid within the grace period (usually 21 days). If you won’t be able to pay the full amount in 21 days there are still ways to use a credit card without incurring much additional cost.
Some credit card providers offer 0% interest on balance transfers for a short period of time. If you have more than one credit card, look to see if there are any balance transfer offers. If so, pay for the funeral services with the card that doesn’t have the offer, then transfer the balance to the card offering 0% interest on transfers. Just make sure to pay off the balance in the 0% interest time period or you’ll be hit with fees. A transfer fee that’s typically 3-5% of the amount transferred will also be added to the balance.
Online Payment Services
Many funeral homes are modernizing their payment systems to include online payment options like Paypal and Affirm. Many of these services that facilitate online payments allow customers to pay all at once or break the payments into installments.
Typically, you won’t pay interest on the installment payments as long as they are made on time. Pay close attention to when the payments are due and whether you can adjust the payment schedule to make it more manageable.
Life Insurance
For decades people have opened life insurance policies in order to cover costs associated with their death. Families just need to be aware that there are stipulations regarding life insurance claims, and the cause of death matters. In certain circumstances the life insurance provider may refuse to honor the policy. For example, if the person committed suicide benefits will not be awarded.
Funeral Insurance
Millions of Americans don’t have life insurance, but they may have funeral insurance, also known as final expense insurance. This lesser known type of insurance is specifically for covering the cost of a funeral. If you want a large extravagant funeral that is going to cost thousands, funeral insurance could make sense.
In most cases, because direct cremation is so affordable this payment option isn’t used often. The monthly premium could end up being as much or more than the actual cost of the service.
Prepaid Funeral Services
It’s possible to pay for funeral services in advance over time to make the financial burden easier to manage. With this option, a person can select the funeral services they want then enter a contract with the funeral home to pay for the services in one lump sum or in installments.
However, consumers have to be careful about which funeral home they work with when they are prepaying for services. If you’re considering this option, it’s important to know what pre-planning funeral costs to expect and how to minimize the risk.
Benefits for Funeral Services
There are a lot of organizations that offer special benefits that qualified individuals can use to pay for funeral services. For instance, VA burial benefits for military veterans are a great way to get many costs paid for by the government. In recent years the VA has expanded the benefits to cover more cremation-related costs, and the government is adding more columbarium niches to national cemeteries.
Other benefits that could provide financial assistance include:
- Medicaid Death Benefits
- Labor Union Benefits
- Social Security Death Benefits
Funeral Home Payment Plans
Some funeral homes now offer the option of paying for services in installments through a payment plan. You can expect to pay a large portion of the cost upfront and then the remainder will be due over time for a preset amount each payment.
Be very careful using this option because you’ll be entering into a financial agreement with the funeral home, and they are setting the terms. Read all of the fine print so you know how much you’ll end up paying.
Cremation.Green has helped revolutionize the funeral service industry by developing eco-friendly direct cremation practices that more families in Texas can afford. If you’d like to know more about arranging funeral services or available payment options, please call or text us at any time at 512-222-8000.