Crowdfunding is Not a Replacement for Life Insurance
Updated: Jul 31, 2020
A recent and popular trend on the internet is the use of crowdsourcing sites like GoFundMe as an alternative for life insurance. Usually an expected tragedy or rapid declining health is the root cause of starting such campaigns.
Most fund raisers start at a goal of $1,000 and we’ve seen them go all of the way up to $100,000 and beyond. Typically family and friends are raising money to cover things such as:
Critical illness costs
Health costs not covered by a plan
Funeral Costs Add Up Quickly The average cost of a funeral in the U.S. is $7,000. There are over 20,000 funeral and tribute campaigns on GoFundMe, but on average they only raise $2,200. This is well below the average cost of a funeral, which leaves families scrambling to cover the balance.
Look Out For Taxes You should also beware of the tax implications on crowdfunding sites. If you raise more than $20,000 or receive more than 200 contributions you’ll need to complete a 1099-K and report the money to the IRS as income. Typically, funeral and related costs are tax exempt, but it still adds more complication to the situation.
Watch out for Scams
Most campaigns on GoFundMe are legit, real people and families in need, but there are some scams that take place. The photo at the top of the blog is a screenshot from one such scam. Trying to get people to trust you and donate to the cause is just one more thing to stress about.
A Life Insurance Policy is Better for Covering Funeral Costs Many people never purchase life insurance because they believe it’s too expensive for them, or think that they’ll never need it. Some people also think that they are too old or unhealthy and will be automatically rejected by the insurer they apply to.
However, there policies known as “Guaranteed Issue Life Insurance” polices that are often called “Final Expense Life Insurance” or “Funeral Cost Life Insurance”. These policies do not require a medical exam and are guaranteed.
If you or your loved one is still in relatively good health, you can get a Term life insurance policy for relatively cheap. For example, a Term life policy for a 50 year old male with a limit of $100,000 could be as low as $15 a month. That’s more than enough to pay for funeral costs and any other significant needs.
Worry Free with a Policy At the end of the day, it’s better to purchase a life insurance policy now, when it’s cheaper and tragedy hasn’t hit. When it does come time to use the policy, there will be no headaches, worry, and scramble to raise money. Instead your family will get lump sum tax free to cover funeral expenses and other costs.
Get started on a life insurance policy quote for yourself or a loved one today. Believe it or not you can buy a policy in someone’s behalf.
AZ Insurance Team 480-535-5709 https://www.azinsuranceteam.com/life-quote