How Much Final Expense Coverage Does a Family Actually Need?
One of the most common questions I hear about final expense insurance is pretty straightforward:
How much coverage do I actually need?
People sometimes expect there to be one number I can give everybody.
$10,000.
$15,000.
$25,000.
But that's not really how I look at it.
The right amount of final expense coverage depends on what you want the policy to accomplish, what expenses your family could face, what resources you already have available, and what comfortably fits your budget.
For one person, $10,000 might accomplish exactly what they want.
For somebody else, it wouldn't come close.
So instead of starting with a coverage amount, I think it makes more sense to start with a different question:
What would your family actually need the money for?
Start With the Funeral You Actually Want
This is probably the most obvious expense.
Burial and cremation can have very different costs, and even within those categories there can be a huge range depending on what you want.
According to the National Funeral Directors Association's 2023 pricing study, the national median cost of a funeral with a casket and burial was $8,300. A funeral with cremation had a median cost of $6,280.
And those figures don't necessarily represent every expense a family might encounter.
Maybe you want a traditional funeral and burial.
Maybe you want a simple cremation.
Maybe you already own a burial plot.
Maybe you don't care what happens to your remains and simply don't want your children pulling out their credit cards when the time comes.
Those are completely different situations.
That's why I don't think somebody should choose an arbitrary amount of final expense coverage just because they saw that number in an advertisement.
Figure out what you actually want first.
Then we can put a number to it.
The Funeral Isn't Always the Whole Expense
This is the part people sometimes overlook.
When someone dies, the funeral home isn't necessarily the only place the family owes money.
There can be:
Medical bills
Credit card balances
Utility bills
Rent or mortgage payments
Travel expenses for family members
Legal or administrative expenses
Cemetery expenses
Flowers, obituaries, or memorial expenses
Other bills that don't magically disappear because someone died
The Federal Trade Commission has a useful funeral pricing checklist showing just how many separate expenses can be involved in funeral arrangements, including transportation, services, caskets, cemetery costs, grave opening and closing, markers, and other items.
That's why I like to look beyond the price of the funeral itself.
If the funeral costs $8,000 but there are another few thousand dollars in expenses the family will have to deal with, an $8,000 policy might technically pay for the funeral while still leaving the family scrambling.
The point of final expense coverage is to make things easier.
Not almost easier.
Ask What Your Family Could Comfortably Handle Without You
Here's another way I think about it.
If something happened tonight, how much cash would your family realistically have available tomorrow?
Not retirement accounts.
Not property they might eventually sell.
Not money they could potentially borrow.
Money they could actually access when bills started showing up.
Some families have plenty of savings set aside.
Some have prepaid funeral arrangements.
Some already have life insurance.
Others would immediately have to start moving money around, using credit cards, borrowing from relatives, or starting a fundraiser.
There's no judgment in any of those situations.
But there is a difference in how much protection each family might need.
If you've already set aside $10,000 specifically for your final expenses, you might not need as much insurance as someone who hasn't set anything aside.
Final expense insurance doesn't have to replace planning you've already done.
It can fill the gap.
Don't Count on Social Security to Pay for the Funeral
I've had people assume Social Security provides enough of a death benefit to handle final expenses.
For eligible survivors, Social Security's lump-sum death payment is currently $255.
That's it.
Eligibility rules apply, and the payment isn't available to everyone.
That $255 might help with something, but when you're comparing it with the potential cost of a funeral and everything surrounding it, it probably isn't the financial plan most families want to rely on.
A Simple Way to Estimate Your Final Expense Coverage
You don't need to make this complicated.
Take a piece of paper and write down four numbers:
1. Funeral or cremation expenses
Estimate what the arrangements you actually want would cost.
2. Other expenses
Think about medical bills, debts, travel, household expenses, cemetery costs, and anything else your family might have to handle.
3. A small financial cushion
You may want to leave some additional money so your family isn't operating with exactly enough to pay the anticipated bills and nothing more.
4. Subtract money already designated for these expenses
If you have savings, prepaid arrangements, or existing insurance specifically available for this purpose, take that into consideration.
What's left gives you a reasonable starting point for discussing how much final expense coverage you might need.
It isn't a perfect formula.
Life rarely gives us one.
But it's a much better starting point than picking a random coverage amount.
Don't Forget to Ask Funeral Homes for Actual Prices
You don't have to guess what a funeral might cost in your area.
Under the Federal Trade Commission's Funeral Rule, consumers have the right to receive price information from funeral providers over the phone. When visiting a funeral home, you also have the right to receive an itemized General Price List.
You can compare providers and choose the goods and services you actually want rather than automatically accepting a package.
If you're planning ahead, this is worth doing.
Call a couple of local funeral homes.
Ask what the type of arrangements you want would cost today.
Now you're working with a real number instead of an internet estimate.
I'd still leave some room for future price increases and unexpected expenses, but at least you'll have a solid starting point.
More Coverage Isn't Automatically Better
This is important.
I'm an insurance agent, but my job isn't to cram as much insurance into someone's budget as possible.
A policy has to be affordable.
If somebody buys $30,000 of coverage but struggles every month to make the premium, that's not necessarily a better solution than buying a smaller policy they can comfortably maintain.
A life insurance policy only helps your family if it's still there when they need it.
I'd rather help somebody find an amount that addresses their priorities and comfortably fits their budget than put them into something they're going to cancel six months later.
Sometimes that means starting with the ideal amount of coverage.
Sometimes it means finding the best protection the budget reasonably allows.
That's a conversation.
Not a sales pitch.
So, How Much Final Expense Insurance Do You Need?
For many families, the answer starts by adding together anticipated funeral costs, remaining bills or debts, and any additional cushion they want to leave behind, then subtracting resources already available for those expenses.
But your number is going to be your number.
Someone planning a simple cremation with substantial savings may need considerably less coverage than someone wanting a traditional burial who doesn't want their children paying any of the associated expenses.
That's why when someone asks me, "How much final expense coverage do I need?" I don't immediately throw out a number.
I ask questions.
What do you want?
What do you already have?
Who would be responsible for everything?
What would you like to make sure they never have to pay for themselves?
Once we know those answers, figuring out an appropriate amount becomes a lot easier.
Final Expense Coverage Should Solve a Problem
At the end of the day, that's what life insurance is supposed to do.
Solve a problem before your family ever has to face it.
Final expense insurance isn't about predicting exactly what every bill will be years from now. It's about making sure the people you care about aren't forced to make difficult financial decisions while they're already dealing with losing you.
If you'd like help figuring out what that number might look like for your family, I'm happy to walk through it with you.
No pressure.
Just a conversation about what you want protected and what makes sense for your situation.
—
Jason Little
Little Family Security
Life Insurance | Final Expense | Mortgage Protection
