Social Security Death Benefit: What is NOT Covered

Once we’re retired, many of us depend on Social Security benefits every month to get by. That’s what this program was designed for back in 1935, when its inception was to reduce the percentage of senior citizens living in poverty. As part of the Social Security program there is something called a death benefit, which is a lump sum paid out upon the death of an insurance holder to their closest relative. However, not everyone is eligible for this death benefit, and those who are currently insured and could receive this lump sum still need to submit an application to receive it.

Though survivor benefits are helpful when we’ve lost a loved one, anyone who has been through this experience knows how expensive it can be. Besides the medical expenses and unavoidable bills that follow the death of a loved one, there are funeral expenses and burial costs that no one really plans for. The $255 lump sum from the Social Security death benefit will not even make a dent in these expenses.

Don’t Rely on Social Security for Funeral Costs

The average funeral cost in North America ranges from $7,000 to $10,000. This is not an amount of money that most people have on hand at any given time, especially if you are retired and relying on your Social Security benefit to help you get by day in and day out. Funeral costs are not covered by traditional insurance plans, so how do you plan for it?

Preneed Insurance has you Covered

Preneed insurance covers funeral costs when those unexpected expenses are needed. Preneed insurance is purchased directly from the funeral home, which gives you a myriad of options for any combination of services that that funeral home offers. This means that your preneed insurance plan is created to cater directly to your needs and wants for your own viewing, funeral, and burial. Purchasing preneed insurance locks in your funeral price despite inflation or other unexpected hikes in pricing.

Burial Insurance is Another Option

Burial insurance includes a death benefit that can range from $5,000 to $25,000 for an individual plan, though there are family plans available. These plans are very affordable and paid in monthly installments. Burial insurance is available through brokers or insurance companies, but some funeral homes sell burial insurance as well. Burial insurance is often more than enough to cover funeral and burial costs, and like preneed insurance, gives you peace of mind and confidence in the future.

Final Expense Insurance Makes Up the Difference

Final expense insurance policies are purchased directly through an insurance company and may have age or medical limits, but the policies have a range of values from $5,000 to $35,000 at Security National Life. Having a predetermined plan reduces the potential of family conflict at the time of your death because you are able to handpick your own services. This is a benefit that seems small and insignificant until you have arranged the funeral of a loved one, which is a highly stressful event!

Don’t leave your funeral arrangements to fate, plan ahead and prepare yourself for the expenses of a funeral instead of relying on Social Security or other programs to do it for you.