Life Insurance
The Average Cost of End of Life Care
Jan 26, 2022
Financial advisors often offer guidance on planning for major life events, such as funding your children’s college education or preparing for retirement. But what about the cost of passing away? While planning for end-of-life care or final expenses might not be pleasant, it can help avoid a lot of stress and emotional strain for you and your family during an already difficult time.
From end-of-life care costs to funeral expenses, it’s crucial to understand the financial implications of dying and how life insurance can help provide your family with the support they need when that time arrives. While making decisions about end-of-life care can be difficult, it’s also a form of caregiving, as it eases the burden on your loved ones. On a personal level, it offers peace of mind, knowing that if you were to fall ill, you could focus on cherishing time with family instead of worrying about financial stress.
What is end of life care?
End-of-life care, also known as palliative or hospice care, is a specialized area of healthcare focused on providing comfort and support to individuals approaching the end of their lives. This type of care aims to improve the quality of life for both the patient and their family by addressing physical, emotional, and spiritual needs.
End-of-life care is typically delivered by a team of healthcare professionals from various disciplines, offering services tailored to meet the specific needs of each individual.
Key components of end-of-life care include:
End-of-life care is typically delivered by a team of healthcare professionals from various disciplines, offering services tailored to meet the specific needs of each individual.
Key components of end-of-life care include:
- Pain and symptom management to ensure the patient can live more comfortably
- Emotional and psychosocial support for both the patient and their caregivers to help them navigate the final stages of life
- Spiritual and cultural support to provide additional comfort
- Respite care for caregivers to help prevent burnout
- Hospice care when life expectancy is limited to a few months or less
- Bereavement support for the family following the individual’s passing.
What is the cost of end of life care?
End-of-life care expenses can easily reach tens of thousands of dollars, depending on the individual’s health condition and how long care is needed before passing. In fact, in 2019, 10% of all healthcare spending in the U.S. was allocated to end-of-life costs, totaling $365 billion.
When someone develops a serious illness, they typically begin with palliative care, which serves as a precursor to hospice care. Hospice care usually begins when a person’s life expectancy is six months or less. Palliative care costs often include managing symptoms and pain from conditions like cancer or heart disease.
The cost of end-of-life care can vary greatly, depending on the type of treatments received during doctor visits or hospital stays versus at-home care. While health insurance can help reduce some of these costs, it rarely covers all end-of-life expenses. For example, Medicare doesn’t always cover at-home palliative care unless the individual is in hospice care with a limited life expectancy. Even if health insurance or Medicare does cover part of the palliative care, there are still likely deductibles and copayments to pay, which can increase as you age. Therefore, substantial out-of-pocket costs for end-of-life care are common.
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Does insurance cover hospice care?
Hospice care is another significant component of end-of-life care expenses that you may need, and it can be quite costly. A patient enters hospice care when a doctor estimates a life expectancy of six months or less. The primary goal of hospice care is to provide the best possible quality of life during those final weeks or months. In addition to managing pain and symptoms, hospice may also offer spiritual support. These services can take place either at home or in an inpatient facility.
One report estimates that the final month in hospice care costs an average of $17,845. The daily cost of hospice care can vary, with estimates ranging from $150 per day for at-home care to $500 per day for inpatient care. While some hospice care costs are covered by Medicare, including medical services, supplies, physical therapy, short-term inpatient care, and respite care for caregivers, it does not cover things like room and board, treatments aimed at curing the disease, or emergency services like ER visits or ambulance rides.
How much does a funeral cost?
Another important factor to consider when making end-of-life care decisions is your final wishes and the associated costs. The average funeral can cost between $7,000 and $12,000, which can place a significant financial burden on your family, especially if there has already been considerable debt incurred from palliative or hospice care. Additionally, health insurance does not cover any of these end-of-life expenses.
Here’s a typical breakdown of funeral costs that need to be covered:
- Funeral home fee
- Transportation of remains
- Embalming and preparation for viewing or cremation
- Hearse
- Casket
- Funeral plot
- Flowers
- Memorial service
- Headstone
There can be considerable price variation based on the type of services chosen, your location, and the quality of items selected. However, it’s safe to say that you will likely spend several thousand dollars on final funeral expenses, which is why it’s essential to factor this into your end-of-life care planning.
Does life insurance help with end of life expenses?
Life insurance can be a helpful tool for covering end-of-life costs, and its effectiveness largely depends on the type of policy you have. Policies offered through Surevix allow individuals to apply for either term or whole life insurance, both of which provide a lump sum death benefit when the policyholder passes away. While life insurance cannot directly cover palliative or hospice care expenses as those needs arise, the death benefit your beneficiaries receive can help settle any outstanding debts incurred during your illness, including medical expenses.
Life insurance is often used to cover funeral costs, and in fact, this is one of the main reasons people choose to purchase a policy. If you plan to include life insurance as part of your end-of-life care strategy, your first major decision will be whether to choose term life insurance or whole life insurance.
- Term life insurance offers coverage for a set period (usually 10 to 30 years) and provides a death benefit ranging from $20,000 to $2 million. It’s ideal if you want affordable coverage for a specific time frame.
- Whole life insurance, on the other hand, offers lifelong coverage as long as premiums are paid. In addition to the death benefit, your policy builds a cash value over time, which you can withdraw or borrow against as you age. However, whole life insurance generally comes with higher premiums and may offer a lower death benefit compared to term life insurance.
Get ahead of the cost of end of life care
Now that you have a better understanding of “what is end-of-life care?”, you’re ready to begin creating your own end-of-life care plan. This process involves several steps, starting with thinking through and documenting your wishes and preferences for the end of your life. This includes decisions such as whether you want to receive hospice care, your preferred location for care, specific medical treatment requests, and your funeral arrangements—whether you want to be buried or cremated, among other considerations.
Once you have a clear idea of your end-of-life care plan, the next step is to figure out how to finance it. Many people choose to take out a life insurance policy to ensure their final wishes are carried out without placing a financial burden on their family. If you’re unsure of how to proceed, consulting with a financial advisor can help you make informed decisions about the right life insurance coverage and overall financial plan.
If you’re ready to start a term or whole life insurance policy, you can begin today with Surevix.
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