It seems to be a new phenomenon of the digital era that a few times a year, in communities across America, there is news of a GoFundMe campaign for the family of someone who has passed away unexpectedly.
GoFundMe, and similar websites, allow friends and relatives to establish a venue for others to help people in need. According to the New York Times, in its June 5th, 2018 article As Funeral Crowdfunding Grows, So Do the Risks, 13% of campaigns created in 2017 were described as memorials and 17% of adults 20-39 had used the internet to donate money for final expenses.
GoFundMe’s website claims that they are the leader in online memorial fundraising. They also list that they run over 125,000 campaigns each year and raise over $330 million per year in memorial fundraising. While these campaigns are certainly very important and helpful to families in need, those figures imply an average of $2,640 per campaign. These funds go towards such things as funeral expenses and scholarship funds for surviving children. For these items $2,640 is a mere drop in the bucket.
According to the 2016 Huffington Post article, This Is How Much An Average Funeral Costs, the total average cost of funeral arrangements in this country is $7,000 to $10,000 per year. College costs, for in state public universities with room and board, can easily run $20,000 to $30,000 per year according to College Data. These costs also completely ignore the years of lost income that would have been earned by the deceased.
The real solution for families lies not in crowdsourcing after the fact, but in proper planning beforehand. Life insurance is an essential part of any financial plan and is more important and affordable than most clients realize. Even when clients have life insurance already, chances are they are underinsured. According to LIMRA’s 2016 Facts of Life study, even those households that already owned life insurance only had enough coverage to replace 3 years of income (down from 3.5 in 2010). Families with young children will certainly need more than that if the worst happens. Given that statistic, it is no wonder that crowdsourcing memorials have become so visible.
Clearly, we all want to help those in need, and there will be times when it is too late, when someone is uninsurable, or when someone truly cannot afford to use life insurance to protect their families. But for most people, it is not too late, and every GoFundMe memorial campaign should serve as a reminder to everyone to have a conversation with friends and family about protecting their loved ones. The time to have these conversations is now.