It’s common knowledge that the average cost of a funeral has risen and that a family’s ability to cover these increasing costs is hindered by the fact that many families (if not a majority) lack replete savings accounts or insurance policies to help cover the cost of services.
Most funeral directors today recognize this growing problem but feel frustrated by the lack of viable solutions. Thankfully, there’s a glimmer of hope on the horizon — a solution that benefits both funeral homes and the families they serve.
Soaring Funeral Costs
The NFDA estimates that the cost of a funeral has risen 28% in the past decade.
The median cost of a funeral is just over $7,000, and the median cost of a cremation with a memorial service is generally around $6,000. Those aren’t small sums. For many families, those sums are altogether unaffordable. Sure, a healthy savings account or life insurance policy would be ideal, but those are not realistically achievable for everyone.
An increasing amount of Americans aren’t contributing to a savings account or lack one altogether.
According to a survey, more than 60% of Americans have less than $1,000 in savings. A similar study by the PEW Charitable Trusts found that more than 40% of Americans don’t have enough accessible money to even cover a $2,000 expense.
What about life insurance policies? Unfortunately, they’re not terribly common. According to a report by LIMRA, life insurance ownership has fallen to a 50-year low. The report cites reasons such as competing financial needs or even a lack of understanding of life insurance in general. Even those with life insurance said they felt they needed more to cover their estimated expenses. In another report, LIMRA estimated that in 2015 70 million Americans are without adequate coverage. That leaves a lot of Americans with limited financial options.
Financing already has made its way into every imaginable area where services and products are sold to people who cannot afford to pay all at once. Why not funerals, too?
Think about this scenario. The Andrews are a respected family in their small rural community. Their family has been there for generations. Mrs. Andrew’s husband recently passed away. The family had modest savings set aside, but exhausted it after Mr. Andrew fell ill. It left them with around $4,000.
Mrs. Andrew is committed to securing the kind of funeral service her husband deserved. It has been a family tradition that Mr. Andrew’s father and his grandfather have followed. They have all been laid to rest in the same cemetery. The service she wants is just over her budget, with a total cost of $7,000.
With a small loan, Mrs. Andrew would be able to put on the service Mr. Andrew deserved. Her mind would be at ease. She would be able to stretch out her payments over a period of time that would make it affordable for her. Indeed, with a more sizable loan, Mrs. Andrew would even be able to put together a funeral service that exceeded her initial plans.
The option to finance a funeral service could seriously and profoundly affect average American families like the Andrews — families that otherwise might be forced to forego tradition and choose direct cremation. Financing would give families the opportunity to hold funeral services their loved ones deserve.
There’s no question that the ability to offer financing to families will become a major competitive advantage in the near future. Frazer Consultants developed Tribute Pay to give families greater payment flexibility, and funeral financing is certainly on our roadmap.