UPDATED: Mar 26, 2020
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Saving and investing for retirement—it takes discipline and determination. It’s hard work, and the last thing you want is to find yourself with less in retirement savings than you planned on having available.
When you’re retired, the checks from your employer end, but your expenses do not.
- Cable TV
- Phone and internet
- Dining out
- Property taxes
- Mortgage (if you’re not so fortunate to have it paid off yet)
- Gas for the car
- An occasional trip to the cinema
- Auto insurance
- Medical, dental, and eye care insurance (not to mention out of pocket expenses)
- Prescriptions and nutritional supplements
- Gym membership
The list goes on and on….
With all that to pay for, would your spouse or partner have enough to cover funeral expenses, too, if anything were to happen to you?
How Much Does the Typical Funeral Cost?
While none of us like to think about it, we also need to consider the costs of final (a.k.a. funeral) expenses. According to statistics from the National Funeral Directors Association*, the median cost of a funeral in 2012 was $7,045. (That’s without the cost of a monument, cemetery fees, and the added cost of approximately $1,000 for a vault, which cemeteries usually require.) In 1960, the median cost was $708. That’s a twelve-fold increase! And from 2009 to 2012, funeral costs increased by nearly 7.5 percent.
The upward trend will undoubtedly continue, so it makes sense to start thinking about how you and your spouse or partner will manage the expenses. Can you afford—or want—to dip into your hard-earned retirement funds to pay for a final tribute?
Term Life Insurance for Preserving Retirement Funds & Paying Funeral Costs
According to a recent blog post on LifeHappens.org, “…a healthy 65-year-old man has a life expectancy of 87 and a woman 89, and 38% of men and 50% of women will live to the grand age of 90.
That means retirement funds need to last a substantial amount of time.
If you need an affordable way to pay for final expenses without cracking into your retirement nest egg, you might benefit from term life insurance. Unlike permanent (whole and universal) life insurance, term life policies give you coverage for a period of time. If you die before that period (or “term”) has expired, your beneficiaries receive a payout they can use to pay for funeral and other expenses.
Term life policies can give you the greatest amount of coverage for a premium lower than other forms of life insurance. Affordable policies are available for terms of 10, 15, 20, 25, and 30 years, and you can even get a five-year or one-year term policy. Shorter terms come with lower premiums. But when you’re looking at term life to help with funeral expenses, you’ll likely want to give yourself a longer term policy, so it doesn’t expire before you pass away. Or you can take advantage of term life’s versatility; within a specified period of time during your term policy, you are allowed to convert it to a permanent policy. That would increase your premium, but it would extend your coverage for life.
How Much Does Term Life Insurance Cost?
You can easily find out how much a term life policy might cost you by getting a quote online. Before making a decision, realize it’s an important one! Consider talking with a trusted insurance or financial planning professional for guidance about what will serve your loved ones’ needs best.
* “Statistics.” National Funeral Directors Association. Accessed 1.12.2015. http://nfda.org/about-funeral-service-/trends-and-statistics.html.