Despite the name, a final expense policy does not pay a funeral home. It pays a named beneficiary, in cash, with no restriction on how the money is used.
That distinction matters in both directions. It means the money is flexible and can cover costs a prepaid funeral contract would not. It also means nothing forces the beneficiary to spend it on the funeral, which is a reason to think carefully about who you name.
Funeral and disposition costs
The most obvious category, and the one the product is named for.
Under the FTC Funeral Rule, funeral providers must give you an itemized General Price List, which is the document that shows what these costs actually consist of. Typical line items include:
- The basic services fee charged by the funeral home, which is generally non-declinable
- Transfer of remains to the funeral home
- Embalming and other preparation of the body, where chosen. No state law requires routine embalming for every death.
- Use of facilities and staff for a viewing, a ceremony, or a memorial service
- A service vehicle or hearse
- A casket or an alternative container
- A cremation fee and an urn, where cremation is chosen
- Printed materials such as memorial packages and death notices
Note that cremation and burial are not as different in cost as people assume. NFDA points out that many of the same products and services are available with either, which narrows the difference when comparing like for like.
Your rights when arranging any of this, including the right to buy items individually rather than in a package, are covered in the FTC Funeral Rule and your rights.
Cemetery and memorial costs
These are usually billed by a different business than the funeral home, and they are a frequent source of underestimation because they sit outside the funeral home's price list entirely.
- A burial plot, crypt or niche
- Opening and closing the grave
- A grave liner or outer burial container. No state law requires one anywhere in the United States, but many cemeteries require them to keep the grave from settling.
- A headstone or marker, plus its setting fee
- Perpetual care or endowment fees, where the cemetery charges them
- Inscription costs on an existing family marker
When NFDA reports a median funeral cost, cemetery property, monuments and grave costs are generally not included in that figure. Planning from a funeral home's price list alone leaves this category out.
Medical bills that survive the patient
Costs incurred in the final illness rarely stop arriving at death, and they often arrive months later.
- Deductibles, copays and coinsurance from the final months of care
- Out-of-network balance bills, where they were not covered by the protections in in-network, out-of-network and surprise bills
- Ambulance charges, particularly ground ambulance
- Hospice-related costs not covered by insurance
- Durable medical equipment rentals and purchases
- Prescription costs
Estate and administrative costs
Settling even a modest estate costs money, and the money is generally needed before the estate's assets are available.
- Probate court filing fees
- Attorney fees, where an estate is administered with counsel
- Executor or administrator costs
- Certified death certificates, and you will need several
- Appraisals of property
- Accounting and final tax return preparation
- Storage, shipping or clearing of a residence
- Transportation costs for family traveling to the service
Costs nobody plans for
- Repatriation or transport if death occurs away from home, which can be substantial for a death abroad
- Outstanding personal debts the survivors choose to settle, though which debts survive and who is responsible for them depends on the type of debt and on state law
- Continuing household bills during the period before other assets become available: mortgage or rent, utilities, insurance premiums
- Lost income for family members taking time off work
- Pet care arrangements
Why unrestricted cash is the point
The money arriving as a payment to a person rather than a credit at a business is what makes it useful for that list. A prepaid funeral contract covers the funeral goods and services it names, and nothing else. A death benefit can cover the headstone, the medical bills, the plane tickets and the mortgage payment that comes due two weeks later.
It also generally arrives outside probate, going directly to the named beneficiary, which is what makes it available early rather than after an estate is settled. That is covered in how a life insurance death claim is paid.
The flip side: nothing compels the beneficiary
Because the proceeds are unrestricted, the beneficiary may spend them however they choose. The policy owner's wishes are not binding on them.
Practical responses:
- Name someone who will actually handle the arrangements, and tell them what you want.
- Name a contingent beneficiary, so the proceeds do not default to the estate.
- Write down your preferences separately, and give a copy to the beneficiary rather than only putting it in a will, which is often not read until after the funeral.
- Consider an assignment to the funeral home if you want the funeral costs paid directly from the proceeds. How that works, and what it costs you in flexibility, is covered in assigning a death benefit to a funeral home.
- Consider a prepaid arrangement instead or in addition if locking in specific goods and services matters more than flexibility. See final expense vs pre-need funeral insurance vs burial trusts.
Deciding on an amount
Rather than picking a round number, build a rough list:
- Get a General Price List from one or two funeral homes in your area. They are free, you are entitled to keep them, and providers must give price information over the phone without asking your name.
- Call a cemetery for property, opening and closing, and marker costs, which the funeral home's list will not include.
- Add an allowance for medical bills and estate administration.
- Subtract resources that will already be available: existing life insurance, accessible savings, any employer death benefit, and any government payment, covered in what government programs pay at death.
The remainder is a defensible target. It will be specific to your area and your circumstances, which is the point.
Costs vary substantially by region and by provider, and coverage terms vary by insurer and by state. For your own situation, talk to a licensed agent, the issuing insurer, or your state Department of Insurance.
To get connected with licensed carriers and agents who offer final expense coverage in your state, you can request final expense insurance quotes.