People know little about funeral expense insurance. To help you better understand this type of insurance, here are 5 common questions and their answers.
First of all, let’s examine two fictitious cases to illustrate this type of insurance.
Louis, 45 years old
- Family status: single with no children.
- Employment: Louis worked on a golf course during the summer and claimed EI for the rest of the year.
- Relationship to insurance: Never purchased life insurance or funeral expense insurance.
- Cause of death: Diagnosed with aggressive throat cancer. Louis died within three months.
- Financial status at death: Louis had no savings to cover his funeral expenses. No viewing took place so as to reduce costs.
George, 69 years old
- Family status: married, father of two and grandfather of three.
- Employment: retired.
- Relationship to insurance: Had life insurance and funeral expense insurance.
- Cause of death: car accident.
- Financial status at death: George’s family was able to use the insurance benefit to arrange a funeral and celebrate his life.
Often overlooked, insurance to cover the final costs is an essential asset in order to lighten the financial burden experienced by loved ones when someone dies. It eliminates the need to ask difficult questions or go into debt to pay for a final tribute to someone who is dear to us.
In this article:
What is funeral expense insurance?
Also known as final expense insurance, funeral expense insurance is life insurance that pays a non-taxable amount to your beneficiaries upon your death. It ensures that they do not have to use their inheritance to pay the funeral expenses.
Funeral expenses are numerous and can be high. Consider the following:
- Embalming or cremation of the body;
- Purchase of a casket or urn;
- Ceremony;
- Burial and purchase of a lot in a cemetery, mausoleum or columbarium;
- Reception after the funeral;
- Estate settlement;
- Taxes and fees payable on certain assets.
How does this insurance work?
Funeral expense insurance is term life insurance for a selected number of years or permanent life insurance up to age 100.
In the event of your death, the insurer will pay your beneficiaries the amount for which you were insured. This amount is non-taxable. Your beneficiaries may use it as they see fit, without any obligation on the part of the insurer.
The insurance premium is payable monthly or annually, for a period prescribed by the policy.
How much does funeral expense insurance cost?
Since final expense insurance is life insurance, the features that affect price are age, health status and tobacco use.
Let’s look at some examples of profiles and monthly costs.
| Profile | Coverage | Monthly price |
|---|---|---|
| Male, 36, non-smoker, parent of one child, expecting a second |
$50,000 | For only $43/month |
| Male, 50, smoker, construction worker, parent of two children in their 20s |
$25,000 | For only $69/month |
| Female, 64, newly retired, non-smoker, husband and one sister, no children |
$25,000 | For only $60/month |
| Female, 72, non-smoker, 3 children |
$10,000 | For only $49/month |
*price based on permanent life insurance T100 with no cash surrender value
What are the benefits of funeral expense insurance?
For persons purchasing life insurance:
- They are assured that an amount is available to cover end-of-life costs upon their death;
- They can choose the desired amount of coverage.
For the insured’s estate:
- Insurance removes a financial burden because there is an amount available to pay the final expenses;
- There is no need to dip into savings or go into debt to pay for a final tribute to the insured.
Still have questions about the funeral expense insurance offered by Matcha Insurance? Our financial security advisors are available to answer any questions you may have and to reassure you.
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Who will pay your funeral expenses when you die?
For the most part, your heirs, either through your funeral expense insurance, their inheritance or their savings, if that’s their only option.
However, did you know that the Government of Quebec also contributes to the bill? The provincial government provides a taxable death benefit of $2,500. Eligible adults are those who have made sufficient contributions to the Quebec Pension Plan. Please note that pre-arranged funeral services are not required to qualify for the benefit.
Of course, this amount from the government, while useful, contributes to only a part of the bill. That’s why end-of-life insurance is convenient; your estate doesn’t have to go into debt or dip into their savings to pay for your funeral expenses.
What is the difference between pre-arranged funeral services and final expense insurance?
Some people hesitate between pre-arranged funeral services and final expense insurance. Although both are formal contracts, they are two completely different, albeit complementary, elements.
In pre-arranged funeral services, you indicate your last wishes and pay for most funeral expenses through the funeral home before your death. You can choose everything, from embalming and cremation to buying a lot at the cemetery to the ceremony. This option eliminates stress and difficult decisions for your loved ones when you die. However, upon your death, the amounts you paid for your pre-arranged funeral services may need to be adjusted due to inflation. This difference has to be borne by the estate.
Final expense insurance is an amount given to your estate or to the person designated as the beneficiary. This insurance does not indicate whether you want to be cremated or buried. However, it gives your heirs financial freedom. They will not have to pay out of pocket to honour you upon your death.
In conclusion, final expense insurance is a gift you give to your estate to make a difficult situation less painful.
To access this coverage, contact one of the brokers at Matcha Insurance.
