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Families crowdfund after deaths of uninsured kin

Life Insurance and Annuities
by Scott Morrow
People without life insurance turning to crowdfunding after deaths?
People without life insurance turning to crowdfunding after deaths?

Polls show that while a lot of Americans don't have life insurance, most understand that it has a significant value. In many cases, people like life insurance coverage first and foremost because it can help them cover final expenses in the event of their deaths, and that's often because those costs are otherwise quite burdensome to their loved ones. But because many choose not to have life insurance, it often leaves their families scrambling to cover final expenses in other ways.

Indeed, a recent trend has shown that when a person who didn't have life insurance passes away, his or her family goes the fundraising route to help them cover funeral or cremation costs, according to a report from Houston television station CW 39. Often, the money that ends up being raised above and beyond final expenses - however much it is - will go toward helping their surviving family members financially in the difficult times ahead. While there's no hard data on how common this is, anecdotal evidence suggests that it is at the very least increasing in popularity.

Crowdfunding is catching on among those without life insurance, but it's problematic.Crowdfunding is catching on among those without life insurance, but it's also problematic.

A worrying trend
However, financial experts say that this kind of reliance on the kindness of friends, family, or even strangers can pose serious problems for surviving family members, the report said. That's because there's no guarantee these fundraisers end up generating enough money to even cover those final costs, let alone medical expenses and the like that might have also piled up. Moreover, that probably does little to replace the lost income the deceased would have provided over any sort of a long-term basis. That's why it's such a financially perilous proposition.

"You see people going on websites, raising money for funerals, having to have fish fries or sell fish dinner plates to raise money for a funeral," Tristen Sutton, who runs his own insurance agency in Houston, told the station. "Join Team No Fish Plates, get life insurance for your family and your loved ones, so you won't have to go sell fish fry dinners or go to these websites and beg for money in a time of mourning."

A potential hurdle
However, this may not always be something consumers can square with the financial realities they personally face, the report said. One millennial told the station that she doesn't have life insurance, and thinks the fundraising efforts are a reasonable alternative. But she also said that the reason she doesn't have that kind of coverage is that she feels she can't afford it.

As many in the life insurance industry know full well, this is a problem of perception that is a major stumbling block for the industry as a whole. While polls show that people value life insurance, many also highlight that consumers have a very skewed perception of what it actually costs them on a monthly or annual basis. Therefore, any efforts to help people understand that various forms of life insurance can go a long way toward meeting their financial needs, will likely be beneficial to all parties involved.

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