If your family suddenly lost you, would they be financially covered? Crowdfunding and many types of life insurance cover funeral costs. But which is best?
Despite the many different life insurance products and rates available, more and more people choose to opt out of purchasing policies that can help pay for your final resting place.
They may assume others will band together to help pay for their final expenses or they simply don't realize how expensive funerals can be, and as a result, their family may have to bear that financial burden.
One of the more common ways to pay for funerals as of late has been crowdfunding, which is where your friends and loved ones reach out to people online to ask for donations to cover costs.
And while imagining your family and community coming together to honor you is a noble thought. It is a risky proposition to rely solely on the generosity of others when the time arises.
One of the biggest risks, of course, is the financial security of your family. Due to this increased risk, let's take a deeper look at the crowdfunding craze, and how it can affect your family's financial situation in the long-run.
What Is Crowdfunding?
Crowdfunding is a collective effort to raise capital to support a business, project, individual person, or social cause. For this reason, it has been the fuel for many passion projects from musicians and movies to small businesses.
But, crowdfunding isn't reserved simply for the right-brained innovators.
A go-to funding source for families and everyday people, many use crowdfunding to support causes and individuals in need, whether that be helping someone pay for college or helping a family burdened by medical bills.
Crowdfunding Funeral Expenses?
If you type in the word "funeral" into any crowdfunding site, the results may surprise you. According The New York Times, on the GoFundMe site alone, 13% of the campaigns1 relate to memorials or funerals.
But, it doesn't stop there.
To capitalize on the growing trend in funeral crowdfunding, GoFundMe acquired YouCaring.com — another like-minded platform.
This acquisition is solid proof that people depend on the idea of crowdfunding as a source of income when planning a loved one's memorial, offering a sense of security in the face of unexpected tragedy.
As a result, covering sudden funeral expenses is one of the biggest and fastest growing segments of crowdfunding. But as with life, crowdfunding doesn't offer a guarantee. In fact, it's not uncommon for a crowdfunding campaign to fail or to have people depend on donations that don't ultimately materialize.
Why You May Need Life Insurance for Funeral Expenses
According to the Bureau of Labor Statistics, funeral expenses across the nation have increased by over 220%2 since 1986.
To cover these increasing costs, crowdfunding can seem like the simple and easy solution, but it's not the most secure. Besides risking a failed campaign, these fundraisers open a door to fraudulent activity such as scams or undelivered funds.
Yet, family members can easily be lulled into a false sense of security. Believing that crowdfunding is an appropriate way to handle funeral expenses, they fail to make proper arrangements.
There are many life insurance products that can be used towards paying final expenses. However, it's easy to do nothing and trade long-term security for your loved ones for a short-term reprieve by neglecting to purchase life insurance for funeral costs in the hope that the community will pitch in when the times come for your funeral.
This isn't to say that a community won't cover expenses. However, launching a campaign and collecting funds can be a lot of added stress on surviving family. To help safeguard your family, life insurance is a more practical option.
What Is Your Next Step?
Few people want to think about preparing for a funeral, which is why a proactive approach offers a real sense of security and decreased anxiety for you and your family.
Furthermore, it's helpful to understand why seemingly easy avenues like crowdfunding can offer more problems than they solve. Managing and mitigating the financial risk for both you and your family is one of the most important life choices you will make, and making the right coverage choice for your loved ones should be at the top of your list.
Visit our life insurance calculator to learn more about the types of life insurance we offer and what is the right amount of coverage for your needs. We can help you choose a policy to help meet your needs.
1. https: //www.nytimes.com/ 2018/06/05/ business/ funerals-crowdsourcing- crowdfunding-scams .html
2. https: //www.pghcitypaper.com/ pittsburgh/ rising-costs-of-dying- has-led-americans- to-turn-to- rowdfunding-campaigns- for-funerals-how- is-that-affecting- pittsburghers/ Content?oid= 8469547