The High Cost of Death

When Clara Bell received the news in June that her beloved 27-year-old nephew had died of an undiagnosed heart condition, she rushed to be with her sister, Bridgett Young, knowing how devastated she would be by the loss of her only child. “We didn’t really think about much else at that point,” says Bell, who resides in De Soto, Texas, not far from her sister. “For four days we basically just watched her, took care of her, and loved her.”

But the clock was ticking. While the entire family grieved over James Brandon Young’s sudden death, funeral arrangements needed to be made, life insurance companies had to be called, and a newspaper obituary needed to be written and paid for. Realizing that her sister wasn’t in any shape to manage those details, Bell and other family members rose to the occasion.

“We started contacting funeral homes to see how the process worked and how much it would cost,” says Bell, who estimates that the total funeral tab came to $9,000. It took only a few calls to realize there were vast differences in funeral home practices. Some morticians wanted deposits of 50% and demanded that the balance be paid 24 hours before the service–even if the family was still waiting for a life insurance check. Others tried to pressure Bell into buying “a lot of fancy stuff,” she says, including high-end caskets that cost as much as $10,000, and extras including embalming. “We had to weed through everything that was being thrown at us to find someone who could meet our needs.”

Bell selected a funeral home that seemed more compassionate than the others and that required no upfront payments once it received direct confirmation on the phone with the life insurance company that her nephew’s insurance payout would cover the full cost. She ran into more difficulty, however, when she attempted to sign off on decisions for Bridgett, who was too grief stricken to help with the planning process.

“Insurance companies and employers don’t want to talk to anyone but the next of kin,” says Bell, who discussed with her sister whether her son would be buried or cremated. “Our family tradition is burial but, of course, we asked his mother what she wanted.”

Once funeral arrangements were made, Bell and a few other family members wrote Young’s newspaper obituary. The first version included names of relatives, information about the deceased, and a personal message from his mother. The total bill for publication came to about $600, but the family wanted to spend no more than $200. “We had to cut it down to get within budget,” says Bell. “During the editing, a lot of my sister’s ideas fell by the wayside.”

Lower costs with dignity
Bell’s family isn’t alone in tackling the high cost of burying a loved one. But even in the midst of their grief, the family took a prudent first step by calling several funeral homes to compare prices.

Although many people choose funeral homes because of proximity or family tradition, the purchasing of funeral services is actually a business transaction that should be part of a family conversation, says Josh Slocum, executive director of the Funeral Consumers Alliance. “In any area of the country, prices at funeral homes differ by thousands of dollars for the same services. There is no justification for such excessive prices.”

To help keep costs down and honor a loved one as well as family or religious traditions, consumers have several options.

Plan ahead. “Just the way we teach our children how to compare prices at an auto dealership or to examine credit card interest rates,” says Slocum, “we need to equip them to make end-of-life decisions.” Planning ahead doesn’t mean prepaying a funeral home, however, which Slocum and other consumer advocates discourage. Instead, you can open a “pay on death” account at any bank, and choose a friend or family member as the beneficiary. But it does mean discussing with family members what you want.

Know your rights. To protect and educate consumers, the Federal Trade Commission has established the Funeral Rule, a federal law, which, among other things, requires that funeral directors offer consumers itemized price lists and not just prices for packages of services. Other rights include the option of buying a casket (which can be purchased online), elsewhere and not being charged an extra handling fee by the funeral home. You also have the right to comparison shop by phone, as Bell’s family did. Slocum says the FTC is not sufficiently enforcing the Funeral Rule, however. So, consumers must educate themselves.

Know your options. The traditional funeral with a casket, limousines, memorial service, and flowers is the most expensive. As of 2006, the latest figures available, according to the National Funeral Directors Association, the median cost for traditional funerals is $7,323–excluding the cemetery, monument or marker, flowers, or obituary. A lower cost option that can still provide a dignified farewell for a loved one includes cremation and omitting some of the costlier aspects of a traditional funeral, such as limousines or a high-end casket. Although cremation costs less, you should still shop around. Cremation prices can differ by thousands of dollars. Keep in mind that a casket isn’t needed with cremation unless there will be a viewing. Even then you can opt to rent a casket. Direct cremation and direct burial, in which the body goes to its final disposition quickly, are the lowest cost options. But even for those who want to have the deceased present at the memorial service, costs can be lowered by avoiding embalming, which Slocum says is almost never necessary, and by purchasing an inexpensive casket. According to the Casket & Funeral Supply Association of America, wholesale casket prices range from less than $300 to more than $8,000.

Pick up the Phone

Here’s an action plan to follow if you’re handling funeral services and burial plans for a loved one:

Call a licensed funeral director.
Consider asking friends and family for referrals. Be sure to get price estimates from several directors.

Call your loved one’s employer immediately.
Ask about the deceased’s benefits and any pay due, including vacation or sick time, disability income, etc. Ask if you or other dependents are still eligible for benefit coverage through the company. Ask whether there is a life insurance policy through the employer, who the beneficiary is, and how to file a claim.

Call the life insurance company.
Locate the deceased’s insurance policy. Call the agent or company and ask how to file a claim. Usually the beneficiary (or the beneficiary’s guardian, if a minor) must complete the claim forms and related paperwork. You’ll need to submit the death certificate and a claimant’s statement to establish proof of claim. Remember to ask about payment options. You may have a choice between receiving a lump sum and having the insurance company place the money in an interest-bearing account from which you can write checks.

Call Social Security and other organizations.
Notify Social Security at the time of the death. If your loved one was covered, the spouse or dependents may be eligible to receive certain payments or benefits. Also call any unions or professional or service organizations your loved one belonged to. He or she may have had life insurance or other benefits through these organizations.

Once these phone calls have been made, gather important papers, such as deeds, business agreements, tax returns, bank statements, earnings statements, birth and marriage certificates, military discharge papers, Social Security card, vehicle registration, loan payment books, and bills. You’ll need these to file a final tax return and settle the estate.