When a loved one dies without life insurance the financial burden left behind can be devastating. In the following article we will talk about what happens when you die without life insurance. And more to the point, how are your final expenses and burial costs handled, who pays for your funeral, and why you should care.
When a Loved One Dies Without Life Insurance
Despite life insurance being essential for your loved ones left behind, there are still many people who choose to do without life insurance every single year. In fact, estimates from the US Census Bureau suggest that around two and a half million people die each and every year without having some form of policy in place. If we break this down further, this comes out at 6,850 every single day. As you can see, this is shocking even in 2017 and we can delve even deeper.
Life Insurance Statistics
Considering the main reason why people don’t buy life insurance is because they don’t want to lose the money from their disposable income, you would assume that the majority of these people were low income earners. However, over millions of people earning between $50,000 and $250,000 are still without life insurance at this very moment.
Additionally, around 30 million people within the same earning range believe their coverage to be inadequate for its intended purpose, such as providing for loved ones when they die.
Not only are families being left behind with no money at all to replace income, many others are having to stretch small amounts a long way or are forced to use their own money.
But wait, there is more…
Unfortunately, the same statistics for those earning less than $50,000 aren’t available from the Life Insurance Marketing and Research Association (LIMRA). However, we know that this earnings bracket has more people in it than the one above so we can safely assume that there are even more people going without life insurance. If we use the same percentages, we can estimate a little over 90 million without insurance and just under 40 million admitting to an inadequate amount.
And finally, according to a 2011 LIMRA study, in 1960, 59% of U.S. adults had individual life insurance. In 2011, only 36% of U.S. adults own life insurance.
We realize that we have thrown various numbers and statistics at you in a short time period but it is important that the message of this desperate situation gets across. To summarize, we can estimate that a couple of percentage points below 50% of people that die each year do so without life insurance. After this, around 20% don’t have enough coverage to pay everything after death. Essentially, this means that just 30% of Americans have a life insurance policy that they consider to be ‘enough’ to replace income and deal with other expenses.
The Need for Life Insurance
Life insurance is essential for replacing income, covering debts and obligations and paying for burial services. If you were to die, you want to be sure that your family can support themselves for a time period until they can downsize or think of a way to make it through.
Without life insurance, they simply aren’t getting this support but the problem worsens because they also have to find money for a funeral. With the average funeral costing up to $10,000, this money has to come from somewhere.
Furthermore, the death benefit from life insurance coverage is also important for paying off debts and medical bills that may arise. With the sheer amount of people dying without life insurance, families and individuals are being financially crippled every single year. For something that is so easily prevented, this is a crying shame.
What Options Exist?
In truth, there is being an inconvenience when it comes to finances and there there is leaving no money behind for your family. Unfortunately, most families will not have thousands of dollars that they can find to pay for a funeral. If this is the case, they would probably have to resort to another technique to raise the funds, such as:
Payment Plan – First and foremost, most funeral homes will offer a payment plan so that your family could have the funeral held. From here, they would repay the cost over a period of many months. Although this loan-type arrangement will have no impact on their credit score, they will be tied down to these monthly payments for many years.
Loan – Your family and friends may have to get a loan and this will have various other costs attached aside from the loan itself. For many years afterwards, they will be repaying the loan which has numerous negative effects because they will struggle to let go and move on if they are still paying for your funeral long after the event. Additionally, this will damage their credit rating and put them in a tough financial position for some time.
Social Security Administration – If you happen to collect Social Security before passing away, your family may receive some support but this is subject to various factors and isn’t an option for most.
Non-Profit Organization – Sometimes, there is a non-profit organization in the area that are willing to help so this could be a solution. Ultimately, it will depend on the cause of your death or any other factors relating to you and your case. For example, your family would be more likely to receive support if you left behind children. However, relying on your church to bail out your family due to your lack of prevention is not ideal.
Kickstarter Campaign – With the advancements we have seen in the internet in recent years, some people have managed to fund the funeral of a loved one by crowdsourcing, such as gofundme campaign. After setting up a campaign on one of the most popular sites, your friends, family members, or even strangers could donate to the cause. If you ask people to donate to this rather than sending flowers, a good amount could be raised in a short period of time.
Releasing Your Body – If none of the above works or is applicable to your case, your family may have no other option than to release your body to the County Coroner’s Office. From this point forward, your body will belong to the government and you will be buried or cremated. For a fee, the ashes can be collected by loved ones; if not, they will go to a common grave. Ultimately, this is seen as a last resort and provides a rather bleak way to end your life but many families have to choose this method every year.
Other After Death Expenses
So far, we have discovered some of the main expenses that may arise after your death such as your funeral, any debts you may have, and the replacement of your income. However, there are others that we haven’t yet discussed.
Counseling – If your death was completely out of the blue and unexpected, it will be harder for your family to deal with the situation they are now faced with. When children are involved, the likelihood of counseling increases because they tend to bottle up their feelings. If professional help is required, their health insurance may not cover it completely or at all. With each session alone costing $100, this soon leads to thousands.
Travel – Over the years, your family members may have dispersed across the US or even the world and they will have to fly home for your funeral. Moreover, your body might even have to travel home and this is a fee that your loved ones will have to face. If you plan on being buried in a different state to the one you reside right now, surely you need to leave enough money behind for your families to say goodbye at your funeral?
Dying with No Life Insurance Summary
If you are currently reading this without life insurance, we hope that you see the importance of this tiny cost now. Although we used some hard-hitting scenarios and hypotheticals, we needed to make it clear how many families are being affected by a lack of life insurance each year.
Even without thinking about money, your family will have a hard time if you were to pass away just as you would with them. When you fail to plan for this event, no matter how little you enjoy discussing it, the entire grieving process becomes a lot harder. In addition to grieving, they will be worrying about money issues and the emotional impact of all this can take years to resolve.
In the past, there has been misconceptions about the life insurance industry and maybe this is why so many people still go without it. Now, you can see that the companies have no interest in anything other than protecting you and your family. When you go without insurance, the companies don’t miss out; it is you and your loved ones that miss out.
Today is the day!
Aren’t you glad you stumbled upon JustBuryMe. We are a life insurance agency that works with many different life insurance companies, offering ordinary life insurance, simplified issue life insurance and final expense life insurance.
We can help you find the right policy at the right price so that you can leave behind a positive memory instead of a hardship.
Give us a call today to speak with a life insurance professional and let us help you find that life insurance policy you so desperately need.