Plan for Tomorrow | The growing trend of crowdfunding funerals and why it can be a problem
A young couple look concerned while planning their estate.

The growing trend of crowdfunding funerals and why it can be a problem

Sep 20, 2023, 7:49:12 PM | Reading Time: 4 minutes

From launching a business, to covering pet bills, to helping out with a family member's medical costs, crowdfunding has arrived in a big way. Crowdfunding is even being used to pay for funerals. GoFundMe, one of the largest and most popular fundraising sites, says that more than 125,000 memorial fundraisers are created on its site each year, with more than $330 million raised annually.

The majority of funeral fundraisers are millennials, with nearly 20% of adults ages 20-39 saying they have used the internet to raise money for funeral-related arrangements, compared to just 4% of adults age 40 and older.1

While crowdfunding has gained popularity, it isn’t a guarantee. Life insurance, however, can provide a guaranteed death benefit to your loved ones – and it can be more affordable than you may think.

Crowdfunding likely won’t raise enough

Though there are campaigns that go viral, the truth is successfully crowdfunding is not guaranteed and likely may fail.

The average cost for a funeral in 2021 was nearly $8,000, but could be more than $10,000, depending on the burial options chosen.2 This can be a huge burden for millennials, especially since funeral costs would be on top of any other final expenses like medical bills, mortgages, and college debt.

Life insurance is more affordable than you may think

The cost of life insurance is, perhaps, one of the biggest misconceptions out there. Nearly half of U.S. adults do not own life insurance3, but term insurance can cost as little as pennies a day.

A recent study surveyed Americans on the expected cost of term insurance (specifically, a $250,000 term life policy for a healthy 30-year-old.) More than half estimated the policy would be over $500 annually, when the average cost is closer to $170.4 This means more than half the population has the misconception that life insurance is three times more expensive than it is.

Most people know life insurance can pay for final expenses, but there are a number of other benefits to life insurance, including helping: supplement retirement, fund college expenses, and business succession planning.

Help your loved ones

According to the Federal Reserve, 40% of Americans would struggle to cover a $400 unexpected bill. While crowdsourcing has proven to be a financial backstop for some, providing your loved ones with the peace of mind of a guaranteed death benefit can remove one major stressor during a difficult time.

If you’re unsure where to start, you can get a free term quote to give you an idea of what a policy could cost. A financial professional can help you assess how much insurance might be right for you, and help with your overall financial planning.

1 Funeral and Memorial Information Council (FAMIC)

2 National Funeral Directors Association’s 2021 Cremation and Burial Report

3 Life Happens and LIMRA

4 Insurance Barometer, Life Happens

GoFundMe is an independent company not affiliated with North American Company for Life and Health Insurance®.

Life Happens, is a nonprofit organization dedicated to helping consumers take personal responsibility through ownership of life insurance and related products.

The term financial professional is not intended to imply engagement in an advisory business in which compensation is not related to sales. Financial professionals that are insurance licensed will be paid a commission on the sale of an insurance product.