Will Remembering a Loved One Wipe Out Your Savings?

Gathering to remember and memorialize a loved one after they've passed is a deeply personal time for family and friends to reflect and support each other through the grieving process. Unfortunately, having to pay for an expensive funeral all too often adds an extra, and often an unexpected burden for families already in mourning. With today’s average memorial service nearing $10,000, understanding these costs and your options for financial assistance is more important than ever.

How Much Can a Funeral Cost?

The average cost of a funeral can vary widely depending on where the funeral is held and the type of funeral service. While a basic direct burial or direct cremation can cost $2,000 or less, this type of burial usually won’t include viewings, visitations, or embalming. Plus, there may be additional costs for graveside services and the casket or urn. At the other end of the spectrum, a full-service traditional funeral can land you in the range of $15,000 once you include the cost of a casket, burial plot or crypt, and grave marker.

The National Funeral Directors Association (NFDA) reported that in 2019 the median cost for a funeral with viewing and burial amounted to $7,460, and a funeral with viewing and cremation averaged $5,150. However, both estimates exclude expenses you may need or want, such as a burial vault, urn, cemetery costs, flowers, and more. 

Funeral Cost Breakdown

With costs varying so widely, it can be helpful to break down expenses in detail. The table below lists the 2019 median costs of various funeral services and items, as reported by the NFDA.  

The total cost of funeral arrangements may include items or services not listed above. For example, some people choose to have a luncheon following the service or hire someone to cater the wake. There may also be expenses for a burial plot—if one wasn’t already paid for—and a grave marker or headstone. 

How to Pay for a Funeral

Costs can quickly add up, particularly if your loved one had specific final wishes you want to follow. But there are assets you can use to cover funeral costs that aren’t always discussed and ways to get help for those who need it. 

1. The deceased’s estate

When someone dies, their possessions, assets, and debts become part of their estate. The estate may be legally responsible for funeral costs. However, practically speaking, you might need to begin making funeral arrangements right away. You may be able to pay the funeral costs and then get reimbursed by the estate. 

2. Life insurance proceeds

If your loved one had a life insurance policy, you may be able to use these funds to help cover funeral costs. Some people also have a pre-need funeral insurance policy to cover costs. However, these policies (and their uses) can be complicated. It is best to walk through the plan and your options with a qualified estate planning or probate attorney.

3. Your savings

When there isn’t enough money from the estate or insurance, family members and friends might use their savings to pay for the funeral. Since this can cause financial hardship for many, it will be important to talk with family members about their expectations and agree on a plan for how to split up expenses, if possible. It goes without saying that it can be challenging to discuss money during after the death of a loved one. Having a sound plan for how to cover funeral expenses will help avoid relationship problems down the road and prevent you from wiping out your savings.

4. Assistance programs

You could also look into financial assistance from different organizations and government programs that may pay or reimburse you for funeral expenses: 

• A surviving spouse or child may be eligible for a death payment from the Social Security Administration. 

• The Federal Emergency Management Agency

  (FEMA) offers up to $9,000 in funeral assistance for deaths due to COVID-19. 

• Veterans Affairs has a burial allowance benefit that you may be able to receive if you and the deceased meet the eligibility requirements. 

• Several charities offer help with funeral costs for children, including Children’s Burial Assistance and the TEARS Foundation. 

• American Indians or Alaska Natives may qualify for Financial Assistance and Social Services (FASS), including burial assistance if the deceased’s estate can’t cover the funeral costs.

• Cities, counties, and states may offer financial assistance. 

How to Finance Funeral Costs

If you’re unable to afford or raise funds for the funeral, you may want to look into different ways to finance the cost.

1. Credit card

For many people, a credit card is the preferred method for emergency expenses. But that isn’t always a good choice. Credit cards tend to have a high-interest rate, which means you could wind up accruing a lot of interest and have a difficult time paying off the debt. Additionally, using a large portion of your available credit could hurt your credit score. 

If you have a high credit limit and your card has a promotional 0% interest rate, using a credit card could be a viable option. But keep in mind, promotional periods are short. When it ends, interest will accrue and you may end up paying more than you anticipated. 

2. Secured loan

A valuable asset, such as a home or vehicle, could be collateral for a loan or line of credit. If you already have a home equity line of credit, you might be able to take out a low-rate draw. 

But paying for and going through the initial process to get a home equity loan or line of credit might not make sense. Auto title loans can be easy to get, but they tend to have high interest rates. And, in either case, you risk losing your home or vehicle if you can’t afford the payments later. 

3. Personal loan

Personal loans are often unsecured installment loans with fixed interest rates. You’ll receive the entire loan amount upfront and then repay it with a fixed monthly payment for the loan’s term. 

If you have decent credit, you might qualify for a loan with a low-interest rate and a low (or no) origination fee. But those working on their credit scores may find their personal loan offers have higher interest rates than their credit cards. Still, they may be able to qualify for a larger loan than their card’s credit limit. 

4 Advantages of Paying for Funeral Costs with a Personal Loan

If you need to finance the cost of a funeral, a personal loan could offer several advantages.

1. Quick applications

You can often quickly check your rate and loan offers online without impacting your credit scores. If you receive an estimated offer you like, you may be able to access those funds fairly quickly.

2. Receive funds all at once

Most people’s credit limits aren’t high enough to cover a funeral, which means it might be tempting to spread the costs over several credit cards. This can create havoc and stress when it comes to repayment and budget management. With a personal loan, you can often get approved for the full amount needed in one lump sum. 

3. Predictable and affordable monthly repayments

You’ll also know your exact monthly payment and payoff date when you take out a personal loan. Being able to plan for payments upfront can be easier than trying to pay off a credit card.

Personal loans can also have low monthly payments, especially if you accept an offer with a long repayment period. Although, choosing a loan with a shorter term and higher monthly payment could lead to paying less interest overall. 

4. Lower interest rates

Depending on your credit and payment history, you may qualify for a personal loan with a lower rate than a credit card. You can also often pay off personal loans early without paying any prepayment penalties or fees.

Funeral Cost FAQs

How can I finance a funeral?

There are different ways to finance the cost of a funeral, including a personal loan, secured loan, or credit card. Compare the fees and interest rates you’re offered to see which may be best.  

What are the costs for a COVID-19 funeral?

The pandemic may impact the average funeral costs in your area. However, you may be able to receive financial assistance through FEMA if the person died after Jan. 20, 2020 and it can be confirmed that death was attributed to COVID-19.

What are my options if I can’t afford a funeral?

If you can’t afford a funeral, you could try to gather donations, look into government assistance programs, and ask local charities for help. You could also look for ways to finance the funeral.

Apply for the financial support you need with LendingClub

Funeral planning can be a stress- and sorrow-filled time. As you reach out to family, friends, and funeral providers to make arrangements, know that there are many ways to get help paying for the services. If you need to take out a loan, you can check your rate without impacting your credit score. After accepting an offer, funds can be deposited directly into your bank account and you can receive your money fast.