How to pay for a funeral?

Set aside money and resources

If you can, put money away for your own burial in advance to save your grieving family from having to make financial concessions after your death.

—Savings. You may save a considerable sum to cover your last arrangements by putting aside merely a few dollars every week. However, while your Will is being probated, the cash will be held up for months. Your family might inquire whether the funeral home would be prepared to postpone part of the costs until the probate process is completed. You might set up a joint account with a trusted family member “with rights of survivorship” to prevent such a wait. After your death, that individual can take the money and use it to pay for your funeral preparations.

—It’s a pay-on-death account. This unique form of bank account assures that the cash you set aside for your funeral will be given to the beneficiary you choose promptly after your death, bypassing the probate process. Unlike a joint account, the beneficiary will not be able to access the funds while you are still living. You can withdraw money at any moment since these accounts are FDIC-insured.

—Insurance. After you die, life insurance pays a lump-sum payment to your specified beneficiaries. Its purpose is to provide the survivors’ basic financial requirements. Insurance proceeds will be distributed quickly after your death, avoiding the need for probate.

Note: We advise against purchasing the following types of insurance since you will often pay as much as, if not more, in premiums than the policy will pay out in funeral expenses.

Burial insurance is a type of life insurance that is marketed by funeral houses in some states to cover death-related expenditures. Pre-need insurance is a whole-life policy issued by funeral homes that covers the pre-determined expense of a funeral. Some states require you to identify the funeral home as the beneficiary, while others do not.

—Paying in advance at the funeral home. When you prepay for your funeral, the money is put into an interest-bearing trust account or an insurance policy by the funeral director. The monies are paid immediately to the funeral director serving as trustee after your death. You can’t modify or terminate an irrevocable trust or insurance policy without the trustee’s approval, however you may typically select a new trustee or funeral home if you change your mind or move. It is possible to cash out or cancel a revocable one at any moment. Except in specific instances, such as if you qualify for Medicaid, we don’t advocate prepaying a funeral. For additional information, see our booklet “Should You Prepay Your Funeral?”

Make a cash payment.

The majority of families will pay for all or part of the funeral expenditures using cash, cheque, or credit card. Most funeral businesses nowadays want full payment up ahead. You may be able to pay a portion of the funeral costs utilizing an installment plan arranged with the funeral home. But don’t tell the funeral director about your money or budget, and don’t be pressured into buying items or services you don’t need or desire.

Seek assistance.

—Employer. The relatives of the dead may be eligible for survivor benefits from some corporations. Some unions may also provide benefits to assist pay or offset the costs of funerals.

—Benefits for veterans. All qualified veterans are entitled to burial at a national cemetery, with the plot, headstone, vault, and interment all being free of charge. All additional charges are the responsibility of the household. When a veteran dies while on active duty, from service-related injuries, in a VA institution, or while receiving a VA pension or disability, the VA pays an extra burial allowance. Some burial benefits are also available to veterans’ wives and dependents. For additional information, see our booklet “Veterans Funeral and Burial Benefits.”

—Aid to the victims Victim Compensation Programs in certain jurisdictions assist families of accident or homicide victims with funeral costs. New York State, for example, will pay up to $6,000 for a homicide victim’s burial. Check your state’s policies.

—Other government organizations Social Security beneficiaries’ surviving spouses are eligible for a lump-sum death benefit of $255. Furthermore, some states or local Social Services Departments may assist impoverished people or those receiving Medicaid, Supplemental Security Income (SSI), or Social Security Disability (SSD) payments with funeral expenses. The sum is generally little, just enough to pay a cremation or immediate burial.

—Fund-raising. Churches, corporations, clubs, and other organizations occasionally assist in raising funds to help alleviate the costs of funerals for individuals in need. Special activities, vehicle washes, and bake sales are common in certain towns to aid families with these costs. You may also attempt crowd-funding platforms such as GoFundMe and Indiegogo, which allow people to create contribution pages.

—Borrowing. We think that no one should go into debt to bury or cremate a loved one, and we strongly advise against taking out a loan for this purpose. Most traditional lenders are hesitant to offer money for funerals. However, certain specific lending businesses work with funeral houses to provide these services. You may borrow up to $10,000 with interest rates of around 15% if your credit is strong. However, borrowing money to cover funeral costs should only be used as a last resort after all other options have been tried.