Listener Asks Suze Orman How To Stop Her Mother From Wasting Money On Life Insurance – Orman Says 'Do A Prepaid Funeral'

Life insurance can be a sensitive topic, especially involving elderly parents. On a recent episode of her Women and Money podcast, Suze Orman responded to a listener's question about how to help her mother make smarter financial decisions regarding funeral expenses.

The listener, Katina, wrote that her 71-year-old mother has repeatedly applied for whole-life or modified whole-life insurance. Katina's concern is that her mother has health conditions that will prevent her from living long enough for the insurance plans to pay out. With limited funds, Katina asks Orman what she should do to prepare for her mother's funeral expenses. 

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Orman acknowledged the mother's reasoning for seeking life insurance, explaining that these policies are often purchased to cover funeral costs in the event of an untimely death. "The reason she’s getting this insurance is that if she dies sooner than later, she has some money to pay for her burial," Orman said.

However, she questioned whether these policies – often marketed on TV for as little as $9.99 per month – are the best use of the mother's limited funds. Instead, Orman encouraged Katina to address the underlying fear driving her mother's decision. "What you need to do is sit down with her and find out how much money she has," Orman suggested, emphasizing the importance of understanding her mother's financial situation and burial preferences.

"Just do a prepaid funeral plan, so she knows that is covered and doesn’t have to buy insurance anymore," Orman said. 

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If Katina's mother has enough savings to cover funeral expenses, her mother can pay for funeral services in advance. This option allows her to pay now, often at today's prices, ensuring those costs are covered without relying on insurance.

According to the National Funeral Directors Association (NFDA), the median cost of a burial is $8,300, while the median cost of cremation is $6,280. While Americans struggle with an unexpected $400 expense, these costs can shock many people. 

If there isn't enough money for a prepaid funeral plan, Orman advised exploring whether Katina or other family members could contribute to prepaying the funeral costs. For families with limited resources, even a small contribution from multiple relatives could help alleviate financial stress.

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However, if neither option is viable, Orman acknowledged that the small life insurance policies Katina's mother is considering might still serve a purpose. "These little policies of $30 a month – that might pay for her funeral expenses, especially if she is not healthy. Might be the way to go, believe it or not," she explained.

Orman's advice centers on addressing the fear behind financial decisions and finding practical solutions tailored to an individual's situation. In this case, Orman says that Katina's best course of action is to have an open and honest conversation with her mother about her financial resources and burial wishes. By exploring prepaid funeral plans or other alternatives, Katina can help her mother find peace of mind without wasting money on insurance that may not be the best fit.

For listeners grappling with similar concerns, Orman advises careful planning and clear communication when managing end-of-life expenses.

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