Earlier last month, Senate Majority Leader Chuck Schumer and Representative Alexandria Ocasio-Cortez announced that FEMA will now reimburse COVID-19 funeral costs to families with financial need.
During the pandemic, many Americans have, and continue to struggle to pay for funerals for loved ones who died of COVID-19. Last year, refrigerated trucks were brought in after hospitals could not keep up with all of the bodies of those dying from COVID-19. Funeral homes were inundated.
“Ten an hour. People were calling,” Milton Lane, funeral director of Paul Lane Funeral Home in Jamaica, Queens, said to CBS New York . “I had a number of families that actually because of financial concerns opted for direct cremation, but the deceased actually owned a grave.”
Financial Tragedy of Death
The average cost of a funeral and burial in the US is $7,360, according to the latest data from the National Funeral Directors Association (NFDA). If you get a vault — required by many cemeteries — that number rises to $8,755.The average cost of a funeral and cremation is a little lower: $6,260.
For the more than 135 million Americans earning less than $50,000 a year, this is a financial burden many of them simply cannot afford, without plunging themselves into debt, using all their savings or retirement funds or having to find often impossible alternative sources of income.
As some indication of what the cost of death has been to the Americans, Sen. Schumer and Rep. Ocasio-Cortez said the Federal Emergency Management Agency (FEMA) will have $2 billion with which to reimburse up to $7,000 for applicants meeting the requirements of COVID-19-related funeral and burial costs. The lawmakers made the announcement in Corona, Queens, one of the city’s hardest-hit neighborhoods.
“When Black, Brown and working class families are getting hit disproportionately hard with cases, it means that they’re also losing more people,” Ocasio-Cortez said. It also means that these same families are disproportionately bearing the heaviest financial burden.
Guilford economics professor Bob Williams approves of this funding decision.
“Offering households who’ve lost family members to COVID-19 up to $7,000 in funeral expenses provides a targeted way that the government can help suffering families,” Williams said.
Hannah Preston, a political science and public health major, has a more personal perspective on this issue.
“As someone that’s lost a loved one during COVID-19, I know that $7,000 covers the cost for a casket,” she said. “I think that really puts into perspective the emotional, fiscal and financial burden placed on families during this pandemic and how overdue this support from the government is.”
What did not get so much attention perhaps was something that Ocasio-Cortez also said during that press conference. Making the issue personal, she stated,
“I lost my dad when I was about 18 years old. And the funeral expenses haunted and followed my family, along with many other families in a similar position, for years.”
Mortality Gaps in the U.S.
But what might be personal for Ocasio-Cortez is actually a national tragedy affecting over 30% of all American. In their 2016 study, Michael Stepner and Sarah Abraham, from MIT’s Department of Economics, reveals huge mortality gaps in U.S between wealthy and low- to middle-income (LMI) Americans
“When we think about income inequality in the United States, we think that low-income Americans can’t afford to purchase the same homes, live in the same neighborhoods, and buy the same goods and services as higher-income Americans, but the fact that they can on average expect to have 10 or 15 fewer years of life really demonstrates the level of inequality we’ve had in the United States.”
In their book, Deaths of Despair and the Future of Capitalism, Princeton University Press, 2020, authors Anne Case and Angus Deaton report on a mortality gap associated within a subset of LMI Americans. They say the death rate of white, non-Hispanic middle-aged Americans without a degree-level education qualification have tripled over the last 25 years because of poor health, substance abuse and suicide. The authors cite lack of education and financial instability as significant causal factors.
The cost of this mortality gap for low and moderate income and mortality does not just come at a huge emotional cost…
The significance of this mortality gap also comes at a massive, inter-generational financial cost of approximately $10 Billion — each and every year — to a population least equipped to pay for it.
Protections Against Financial Tragedy
There are two reasons why Resilient focuses on an Inclusive Insurance, or micro-insurance model.
The often tragic financial impacts of burial costs for Low & Moderate Income families could be avoided if those families were protected with affordable life insurance products. The reality is that they aren’t — or at least weren’t. It’s reported that in 2020 46% of Americans did not have a life insurance policy — 86% of whom are from low or moderate income households — placing these consumers at risk for what so many have experienced during the pandemic: a crippling financial blow at the loss of a loved one. Just as this population was historically undeserved by the banking sector until the recent wave of FinTech innovation swept the industry, so it has been with regard to the insurance industry being unable to service this population on its historically unwieldy and arcane infrastructure and distribution models. Resilient believes that there is now a real opportunity — as well as a moral obligation — to deliver innovative insurance products and services that can be made available on intuitive and cost effective digital distribution platforms that are relevant to these consumers needs and behaviors.
Making products affordable, relevant and reliable is a first step in this direction. Coupled with the value proposition delivered by Resilient’s platform that allows businesses to offer anywhere from $5000 to $25,000 of Life insurance at no cost to their customer in exchange for behaviors that support their business goals is a unique solution that provides even more access to protection (e.g. 1099-employers can attract more reliable employees by providing Inclusive Insurance, or a cellular service provider can increase customers by including insurance products as a value add). Our expertise in researching, designing, pricing and securing regulatory approval for micro-policies developed specifically to serve this population is robust and we continue to build broad support to find ways to provide viable, scalable solutions to the widening protection gap that exists in developed markets.
This is why we call Inclusive Insurance a business solution to a social problem, and a social solution to a business problem.
“Insurance is a unique tool that can support individuals when they face disruptive life events… such as major home repairs… a pay cut, illness, injury, and death,” concluded the Financial Health Network in their report “Insuring the Way to a Financially Resilient America”.
But the numbers clearly show a need for affordable insurance products to help the millions of uninsured.
While the FEMA bailout is to be commended and provides desperately needed relief to the most vulnerable, at a time where there financial health has been broadly decimated, the private sector must now play its part in solving these problems for the long term so that government can focus using its resources on so many other priorities that exist. Resilient offers one (of hopefully many) solutions: unique partnerships with businesses to offer customers no-cost life insurance, AD&D and disability, or significantly discounted health and dental insurance on a frictionless digital platform they can access at any time. Insurance is an essential element of financial health. When LMI households are insured, they are better protected from tragedy and more empowered to plan for both the near and long-term future.
