"Death is not the opposite of life, but a part of it." wrote the Japanese writer Haruki Murakami.
Death is still taboo in our society, yet we need to talk about death to be prepared for it. Anticipating what will follow will ease the stress and pain for those who remain. And above all, you can prepare for your family's future with a final expense coverage. This whole life insurance policy is specially designed to help cover final expenses and any remaining debts of yours.
Every dollar that you pay for this funeral insurance is actually savings you’re putting aside: and every dollar you put aside will go where it can help the most. But do you know what the final expenses that your insurance can cover are? What are all the things you need to think about before you die?
The end of life, expected or not, is a painful period for those close to you. And unfortunately, your beneficiaries won't be able to deduct funeral expenses, probate fees, or estate administration fees because they are personal expenses. The Canadian administration considers you are supposed to buy funeral insurance to cover your end of life expenses.
But the good news is, you can anticipate and prepare for these expenses with a final expense insurance policy. You can reduce the burden of paperwork for your spouse and children now and ensure that you leave them a large sum to help cover other financial burdens or prepare for the future.. But first, let's see what the final expenses are. You may even find some you haven’t thought of before.
This is often the first expense loved ones make with the final expense plan’s benefit. This capital often pays to cover funeral costs. Do not underestimate these fees and the financial burden they represent! The costs of funeral arrangements and others fees may vary from one province to another or according to your choice.
Here is an estimate of the different costs associated with funerals that could be covered by a burial insurance:
Very often, funeral expenses are the first expense that comes to mind, and yet it is not necessarily the most expensive.
Ultimately, your family will be most stressed about all the steps to be taken between the death and the funeral service. This is when your loved ones have to settle all the central parts of the death's announcement and the final settlement of the estate. The right funeral insurance can be a huge help during this trying time.
Some steps can be taken without assistance, and others will cost your loved ones. But above all, the accumulation of each sum will make a hell of an addition. A bad surprise for those who do not receive any money from a final expense policy:
- Order and send the shares: around $100
- Make a will: you can write it yourself, and it won't cost you anything ... but it could cost your family dearly to have it certified as valid. To avoid this, you will have to pay the sum of $300 to $500 to have your will drawn up by a notary.
- Two documents are crucial for settling your estate, applying for annuities or claiming other compensation. These are the death registration and the death certificate: and this time, your heirs will not be able to cut this expense, which is part of the funeral costs. These fees are typically between $150 and $250 depending on the province where you live.
- Depending on the entities and organizations, the type of documents requested may vary: allow between $30 and $60 for each certificate's emission.
- The burial permit certificate will cost around $20.
- Your family may need to hire an accountant to file final returns to reduce taxes on any other income you had (like paid vacation, annuity etc.): these final expenses cost between $300 and $600 unless a useful final expense life insurance covers them.
Probate is the legal process in which a will is examined to determine if it is valid and authentic. If the testament is not notarized, its legality must be verified by a professional. And there, beware of the notary fees: the bill can quickly go up!
Probate also refers to the general administration of a deceased person's will or a person’s estate who has died without a will. This person is the liquidator of the estate: it could be someone from your family. But if your heirs don't have time to take care of this very daunting and complicated step, they will need to hire a professional to help them, which means more fees.. On the other hand, this expense may well be required because, in the event of a mistake, your family member could be held personally responsible and possibly sued. The solution? Get help from a lawyer, a notary, an accountant or a firm specializing in estate liquidation.
Problems arise when wills are challenged, which can happen in a large family or in conflict. Indeed, even if you have made a will, a court must allow others to question this document. For example, the very validity of the will may be examined for a matter of dates, or your mental state at the time of writing the will may be in doubt.
It is these probate procedures that are going to cost your loved ones the most.
Probate, which can last up to two years, can easily cost anywhere from 3% to 7% or more of your estate's total value.
So, it’s important to prepare for these fees with a final expense insurance plan, and remember to update your beneficiaries on all your contracts and legal documents. Also think about doing your will so your heirs know about your final arrangements.
Do you have a mortgage, business debt, or consumer credit still running? What do you think will happen to these debts after your death? The liquidator of your estate will have to draw on your legacy to pay your creditors. Any debts you leave behind when you die could eat away at the assets, everything you owned before you died and hoped to bequeath to your heirs. And if you don't have enough wealth, your family members will have to pay off your debts.
Insurance for funeral costs can also pay off those debts you no longer think about:
- Real estate loan,
- Credit card,
- Car loan,
- A student loan for one of your grandchildren
- Loan for your business
These debts and loans are part of your daily life: you don't think about them anymore because your payments are automated. But your creditors will remind your loved ones of your debts once you are gone unless your death benefits can cover them!
Why would covering funeral costs have anything to do with medical bills? Well it does, much more than you might think! Most people think of medical bills as free in Canada. However, the Canadian health care system provides only basic services, and each province and territory has its policy on medical expense coverage. Finally, restrictions may apply depending on your immigration status in Canada.
When considering taking out funeral insurance plan, consider the final care cost in the death benefit paid on your death.
According to statistics, about 70% of people die in hospitals. Some people will have to spend the last days of their lives in high-tech intensive care beds due to serious health issues. The bill for this medical care can cost about $1 million per year for Canadians.
And you? How much would it cost you? Some fees are not taken into account by the Canadian government.
- Ambulance costs can cost between $45 and $500.
- Hospital parking costs l (in the event of regular treatment such as chemotherapy or dialysis) keep increasing every year.
- Equipment such as walkers and hearing aids, crutches, casts and canes are at your expense. A wheelchair, for example, can cost between $180 and $500
- Medical records, copies of prescriptions, insurance or disability forms or medical notes for work are also chargeable.
It currently costs the healthcare system approximately $39,947 to treat a patient with organ failure at the end of life and $36,652 for a terminal illness. Most of these expenses are covered by the Canadian government. But for how long? What if our healthcare system were to change in the face of global economic shifts? You don't want to leave such a bill behind to your surviving family members, do you? Final expense plans can help your loved ones.
Creditors usually can't attack your retirement accounts or your policy's death benefit. Therefore, this money will go directly to your designated beneficiaries and is not part of the probate process for your estate, which is great news! Besides, a life insurance benefit is not taxable, and this lump-sum represents capital that can relieve them.
Since life insurance payments are protected from your creditors, you can use this funeral expenses policy to ensure that you have money to pass on to your loved ones. And they might need it in particular to pay taxes that arise after death.
First, they will need to complete your final tax return. Even deceased, your income remains in effect subject to tax. Also, the lump-sum death benefit paid by the Canada Pension Plan (CPP) retirement pension is an amount of $2,500 and is subject to tax. Finally, your family might have to pay federal taxes.
Fortunately, your heirs will not have to spend a penny thanks to your careful planning, since the death benefit of your final expense plan can be used for paying final expenses.
We bet you’re starting to think about your situation. This is a good thing! Think about all the possibilities that you could leave your loved ones. How could you make their life easier? And ensure you did the right thing, even when you're gone? What is the price of serenity? And among all these expenses, how do you make sure that there is something left for your family despite of the rising funeral costs?
Final expense insurance work the same as a life insurance cover. A quick heal questionnaire to give you the best rate, or a medical exam, and a death benefit paid to your beneficiaries upon your death. But life insurance products are many and you might want to talk to an advisor to discuss your options if you want to add a rider for critical illness insurance for example.
Everything will depend on how much you want to save now, how much life insurance should cover and the final expenses insurance you choose.
Our advisers can offer you solutions so that your departure goes as smoothly as possible for your loved ones. Get a free no obligation quote for our term life insurance plan designed to cover funeral expenses and speak with a licensed expert about your needs and budget, so you can make the right decision for your loved ones and buy final expense insurance. We guarantee you a simplified issue life insurance unlike the traditional life insurance policies requiring medical exam and paperwork. Whether you are in good health or not we have a solution for you with no waiting period. Our life insurance coverage process is easy and fast and the coverage amount can reach up to $1 500 000.
Written by Diane Taes