Cremation insurance

What cremation insurance is

There is no separate legal product called cremation insurance. What is being sold is a small whole life policy, the same contract described on our final expense insurance page, written at a face amount that fits a cremation. No medical exam, a page of health questions, a decision usually the same day, a premium that never rises and coverage that never expires while it is paid.

The money is paid to a person, not to a crematory. Your beneficiary receives a cash death benefit and can spend it on the cremation, the memorial, the airfare for the family, or anything else. That flexibility is worth more with a cremation than with a burial, because cremation families very often hold the gathering later, elsewhere, and on their own terms.

What a cremation actually costs

The single most misunderstood point about cremation is that the cremation itself is a small part of the bill. The furnace time and the paperwork are a few hundred dollars. Everything above that is service, facilities, staff and merchandise, which is why the range from the cheapest cremation to the most expensive one is enormous.

Those funeral home figures come from the National Funeral Directors Association price survey. Our full funeral cost breakdown itemises every line that makes them up.

Direct cremation compared with a cremation service

Direct cremation is the least expensive way to handle a death anywhere in the United States. The body is collected, the paperwork is filed, the cremation happens without a viewing, and the ashes are returned to the family in a simple container. There is no embalming, because nothing requires it when there is no viewing, and there is no ceremony at the funeral home.

Families who choose it usually still hold a gathering. They just hold it at home, at a church, at a graveside or at a place that meant something, weeks later, when everyone can travel. That avoids the facilities charge, the staff charge and the scheduling pressure of the first forty eight hours, and it is frequently the more personal option rather than the lesser one.

A cremation with a service costs more because you are buying the same funeral as a burial family, minus the casket, the plot and the grave. The staff, the viewing, the facilities, the printed material and the transport are all still there. If a full service matters to you, size the policy for it. If it does not, a direct cremation and a memorial later is a legitimate choice, not a corner cut.

How much coverage to buy

Match the policy to the plan. Most cremation families are well served somewhere between $5,000 and $12,000, which is meaningfully less than the $15,000 to $25,000 a burial family needs. Buying less coverage means a lower premium for the rest of your life, and that difference compounds over twenty or thirty years of payments.

One warning about going too small. Carriers set a minimum face amount, commonly around $2,000 to $5,000 depending on the company and your age, and a very small policy carries a fixed monthly policy fee that makes the cost per thousand of coverage worse. There is often little practical saving between $3,000 and $5,000, so check both before you settle.

The costs people leave out

Cremation budgets go wrong in a predictable way. The cremation is priced correctly and everything around it is forgotten.

• The urn, which averages about $295 at a funeral home and far less bought elsewhere. You are entitled to buy it anywhere.
• A cemetery niche, a columbarium space or a plot for the ashes, which is a cemetery charge and not part of any cremation quote.
• A rented casket for a viewing before the cremation, which is a separate line and not cheap.
• Certified copies of the death certificate, needed by every bank, insurer and government office, and charged per copy by the state.
• Scattering permits or fees, which apply at many parks, cemeteries and at sea, and airline or shipping rules for transporting ashes.
• Travel for family, catering for the gathering, and an obituary notice if you place one in a paper.
• Medical bills, credit cards and a few months of household costs while an estate settles.

None of these are large individually. Together they are commonly a few thousand dollars, which is exactly the margin between a policy that covers everything and one that leaves the family finding the difference.

What it costs where you live

Cremation prices vary by region, and within a region they vary more between two providers than they do between two states. The regional medians below are funeral home charges for a cremation with a service.

Costs by state gives the figure for your own state and separates the funeral home bill from the cemetery bill, which is where most estimates go wrong.

Insurance compared with a prepaid cremation plan

Cremation societies and funeral homes sell prepaid plans, and for a straightforward direct cremation they can be reasonable. The comparison comes down to what you are buying, a fixed service or a sum of money.

Preneed arrangements are regulated at state level rather than federally, and the protection given to your money differs from state to state. If you are considering one, ask how the funds are held, what happens if the business is sold, and what is refundable if you cancel. Your state insurance department or funeral board can tell you the rules where you live.

Buying a small policy well

The mechanics are identical to any other final expense policy. Health questions decide whether you get a level benefit that pays from day one, a graded benefit, or a guaranteed acceptance policy with a two year waiting period. Most people qualify for day one coverage even with common managed conditions, and guaranteed acceptance is only worth its higher price if the health questions genuinely rule out the alternatives.

Two habits protect the money. Name a beneficiary and a backup, and tell them where the policy is, because a policy nobody knows about does not get claimed. And keep the premium comfortable, since a lapsed policy is the only way to pay for coverage and still not have it.