For Cremation, Can You Avoid These People?

Dec 2, 2013 | 0 comments

If you are curious about cremation in New Mexico, check out this video of a talk I recently gave at my Albuquerque Challenge Toastmasters Club. It’s titled “Can You Avoid These People?”

This refers to a woman who approached me after a talk on Funeral Planning for Those Who Don’t Plan to Die. She said that she planned to be cremated, but she didn’t want to deal with funeral homes, bankers or insurance agents. The text of some of the information is below.

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People think direct cremation is a cheap way to go. In Albuquerque, putting a body into a cardboard box and into a furnace is $1,000 minimum when you add New Mexico gross receipts tax. When you add obituaries, death certificates, a memorial service or reception, more likely it’s at least $2,000 to $3,000.

So, how will you pay for it? This is where insurance agents and bankers come in, despite that woman’s disdain. Here are your options:

You can set aside money using a payable-on-death bank account. This is a simple savings account that can shelter up to $20,000 tax-free. The money is released to the beneficiary, the person you put in charge of making your arrangements, when they present a death certificate at the bank.

If the funeral home knows there’s a payable-on-death account, they will work with your designated beneficiary to get the money released in a timely fashion. They won’t do the work until they know they will get paid somehow. But who can save that much in cash, and keep it in today’s accounts that offer miniscule interest rates?

One can also pay with credit cards – think of the points, the miles! But would your kids have a high enough credit limit and a card that isn’t maxed out?

Another option is insurance, and there are three main kinds: life insurance, pre-need insurance and final expense insurance.

When most folks think of life insurance, they think of fat $100,000 or more policy that covers a family’s finances should a breadwinner die. But it often takes months for these policies to pay up.

To cover the funeral costs, the funeral home can obtain interim financing for a portion of that policy, called an assignment. The family pays an added percentage out of the life insurance payout to cover that financing.

Second: Pre-need insurance is a policy usually written at a funeral home. Funeral homes tout these policies as a way to “lock-in the cost” at today’s rates. Rather than give your money to a company that might be bought up or go out of business, you buy an insurance policy that is portable. If you move elsewhere, you can take that policy to another funeral home and apply the funds to a funeral in another market.

Not only are you dealing with an insurance agent, you’re also dealing with a funeral home.

Third: Many folks don’t know about final expense insurance. This is a smaller policy, ranging from $3,000 to $35,000. Even people in their later years and with less-than-ideal health can obtain this insurance at a reasonable rate. The beneficiaries can put the money toward funeral arrangements, a big party, airfare for the kids to travel, outstanding debts, whatever.

But of course, with any of these options, you have to deal with insurance agents… like me! Yes, my name is Gail, and I’m an insurance agent. It’s true. I don’t bite, really.

A Good Goodbye