Understand the different options for paying funeral costs when you don’t have the money.
Paying funeral costs is not the time you want to be worried about money and it’s not the situation you want to leave your family with…unfortunately, a lot of people don’t have much of a choice.
With more than one-in-three families saying they couldn’t cover a $400 emergency expense, having to pay a sudden $8,000 bill is out of the question. No amount of planning is going to get you ready for that.
Funeral costs are one of the top contributors to financial distress in America. In a survey by the World Bank, four in ten families reported falling into serious financial distress within 30 days after the passing of the primary income earner.
But there is a way out of this trap. There are alternatives to pay funeral costs even if you have no money saved.
Let’s first look at the average funeral cost, then some options to pay for those costs.
How Much Does the Average Funeral Cost?
According to the National Funeral Directors Association (NFDA), the average funeral costs almost $8,000 when you include burial and funeral services. That price is going to differ depending on cremation vs burial but even the most inexpensive funeral will still be over a thousand dollars.
The financial crisis in American has led to a surge in cremation services over traditional burial with almost half (45%) of all end-of-life services last year choosing cremation. That’s up from less than a third just ten years ago.
But even choosing cremation will still cost you an average of $6,708 which is still way above what most families can spare.
Funeral costs have increased at a 2.5% average pace over the last decade. That’s in-line with general inflation but given that worker wages have increased at less than 2% a year, funeral costs are moving further out-of-range for most households.
The biggest portion of the cost tends to be those to the funeral director, casket and burial site. The average funeral home charges $2,000+ for services and a casket with burial site can take the costs higher by $3,000 on average.
Add to all this the cost of travel for many of the extended family and you can see why most experts recommend budgeting upwards of $10,000 for funeral expenses. It’s also why the ‘Final Expenses’ insurance on most policies covers that amount.
What Happens if You Can’t Pay for a Funeral?
There is one no-cost option available but it comes with disadvantages.
If you aren’t able to pay funeral costs, even with some of the options I’ll get to below, the government will pick up the costs.
State and local governments will pay funeral expenses if no family claims a body in the morgue.
You’ll still be asked to confirm the deceased’s identity but will not formally claim the body. This means you’ll sign a release with the county coroner that that will transfer your rights to the state. After you do this, the state or county will arrange for final expenses.
Understand though, if you do this, it takes away all your rights. Many counties have a policy of cremation for all unclaimed bodies since it’s cheaper and you might not even get the ashes or may have to pay a fee to receive them. Even if the county has a burial policy, it will be in a small grave with an in-earth tombstone.
Options to Help Pay for Funeral Costs
Given the loss of control and county policies for the unclaimed, most people try to pay for funeral costs with some alternative. I’ve found six ways to pay for funeral expenses, some that involve paying the money back and others with no obligation on your part.
Check for assets – Even a check on someone’s social security number won’t find all their accounts and money in different places. From investing accounts to safety deposit boxes and Bitcoin, assets have a way of getting lost in the system.
That means you need to go through all records, all files on the computer, to find anything that was missed. Once you’ve found all the assets, it might also mean holding an estate sale to see what you can scrape together.
Check for benefits – from the Veteran’s Administration to union programs and other organizations, lots of groups will help families pay funeral costs of members. Check for all the groups and organizations to which your loved one belonged throughout their life.
Check for life insurance – it was months before we found all the policies my father had when he died. It’s supposed to be an easy process but if your loved one had multiple policies with different companies, it’s easy to overlook one.
Social Security Death Benefits – The Social Security Administration pays a one-time death benefit of $255 to the family of those working at the time of their death.
Ask for Help from Family – this wasn’t just your loved one but a member of a larger, extended family. I know it can be difficult, even a little embarrassing, to ask family for money but it shouldn’t be. The deceased was a part of their lives as well and most people will find that family is more than willing to help out with funeral costs.
Funeral loans – even with many of these other alternatives, most people still come up short in paying for funeral costs. Your last option is probably funeral loans because it’s going to mean interest and repaying the money. Using some of the alternatives though can pay the majority of the costs so you need to borrow less.
Funeral loans are just unsecured personal loans, either from a traditional bank or online lender. Unlike mortgages or auto loans, these aren’t secured against something you own so you don’t have to worry about losing your house if you fall behind on the payments.
No peer-to-peer lender or personal loan website specializes in only funeral loans but because they are personal loans, you can use the money for any need. Getting pre-approved for a loan takes less than three minutes and you’ll see your rate and monthly payment before you accept the loan.
A few personal loan sites to try for a funeral loan include:
PersonalLoans.com is the website I’ve used the most and one of the most popular for bad credit loans. They’ll usually accept borrowers with a credit score as low as 580 FICO and loan up to $36,000 on terms up to five years.
BadCreditLoans.com is another site that specializes in money for borrowers with bad credit and can accept applications with a score as low as 520 FICO. Rates are quite a bit higher but shorter-terms like one-year and lower amounts will help you lower the interest you pay.
SoFi is a good place to start if you have a better credit score. The lending requirements are tougher but you’ll get lower rates if you qualify. SoFi is also one of the most varied personal loan sites with mortgage and student loan refinancing available.
The best part about personal loans is that applying for pre-approval doesn’t affect your credit score. You’ll get an instant rate quote and can apply on several sites to make sure you’re getting the best deal.
How to Cut Funeral Costs
Cutting costs on a funeral isn’t something you probably want to think about when hit with these costs but there are a few ways to budget and save.
Like anything, funeral home fees are negotiable and nobody ever thinks to ask for a better price. The funeral business is booming because nobody wants to negotiate on something like this but you can easily get a few hundred knocked off your bill.
Make sure you compare the cost on a similar funeral at three or more funeral homes so you know what the price should be and can start negotiating from there.
Cremation services are also surging because nobody can afford a traditional burial anymore. You can get cremation for as little as $1,500 though you might also have to pay for add-ons that take the cost closer to two-grand.
You might also consider donating the body to the nearest medical school or research facility. I know this sounds a little weird, to think of your loved one being dissected by a group of medical students but is it really any different than when your family member was being seen by their doctor?
Paying for funeral expenses is something I never like to talk about. I went through it with both parents and grandparents on both sides. It’s something almost all of us have to deal with and few are prepared for it financially. Understanding the different options to help pay funeral costs will help you avoid financial ruin and give your loved one the burial they wanted.