While its difficult to discuss your eventual death with those you love, its imperative to plan for it, not only for your sake, but for theirs. Employers can offer several voluntary benefits to help make this end-of-life planning and transition easier for their employees and the loved ones they leave behind.
Voluntary benefits such as life insurance or pre-paid funeral benefits can help cover, or at least minimize, funeral expenses for an employees next-of-kin, many of whom have no savings set aside to pay for either a sudden or a planned funeral which can costs thousands of dollars.
Over the past decade, the median cost of an adult funeral in the United States has increased approximately 35%, according to the National Funeral Directors Association. The national median cost of a funeral in 2012 was $7,045. If a vault is included, something that is typically required by a cemetery according to the association, the median cost jumps to $8,343. Neither of those prices includes cemetery, monument or marker costs, crematory fees or miscellaneous cash-advance items, such as flowers and obituaries which often bring the grand total to $10-$15,000 or more.
Employers can offer a whole-life or term-life policy that, when designed correctly, can help an employees pre-named beneficiary cover funeral expenses.
A burial insurance policy, also called funeral insurance or memorial insurance, is also a form of life insurance that allows an individual to leave a small amount of money behind for loved ones to help cover funeral-related costs. Typically offered as a whole life policy, it builds cash value and offers a flat premium throughout the life of the policy. These policies usually pay out anywhere from $5,000-$25,000 upon the insureds death.
Although similar to burial insurance, a final expense policy offers a higher payout to cover all final expenses, including funeral-related costs and any final medical costs. Many insurers allow the low weekly or monthly premiums for burial and final expense policies to be deducted through an employers payroll department.
Insurance companies such as Lincoln Heritage Life Insurance also offer an opportunity for individuals to pre-plan funeral details and will help execute the plans on the insureds death. As part of their Funeral Advantage program they compare up to three different funeral homes to find the best price available, often saving families on average $1,800 for a traditional funeral and up to $600 on cremation, according to the company. They also offer beneficiaries a 24-hour toll-free service number to call in time of need.
Companies like New York Life are now offering second-to-die life insurance policies, which allow two people to be insured on the same policy. A second-to-die policy pays benefits after the second of the two insureds has died.
New York Lifes second-to-die or custom survivorship whole life policy can also be used for small business partnerships with two employees. While businesses can often withstand the loss of one key employee, the loss of two could be devastating.
During the voluntary benefit enrollment process, benefit advisers can work with employers and employees to help determine whether these life insurance offerings are suitable for their needs and, if necessary, how much life insurance they need.
