Funeral insurance... Someone will have to pay.

Lets face it. We all know you should have a will, especially if you have a spouse and/or kids.  No one wants to have the conversation, but with the average funeral costing $6,590 (not including costs for the cemetery, grave marker, or flowers) someone will have to pay and many don't like the thought of placing that burden on their families.

Today, there are many options for funding funeral expenses.  This article helps us take a look at the big picture before making any final decisions.

What is funeral insurance?

Funeral insurance is a bit of a misnomer. You can't buy an insurance policy that will cover every conceivable cost related to your death. The terms "funeral insurance" and "burial insurance" generally refer to small life insurance policies marketed to people who want to leave a little money behind for their families to cover final expenses.

These whole-life policies provide coverage for the rest of your life and have cash value. The cash account builds over time; you can withdraw or borrow against it, although the amount – plus interest – will be subtracted from the death benefit if you don't repay it. Because these policies are small, the cash value is minimal.

The promise of no medical exam may sound appealing, but Don Roberts, a financial adviser with Sapient Financial Group in Austin, Texas, says you'll get a far better rate per $1,000 of coverage if you are in good health and apply for a traditional life insurance policy that requires health information and a medical exam.

Read the fine print on any life insurance policy you are considering purchasing. Many guaranteed-acceptance policies pay only a portion of the death benefit if you die within the first two years after purchasing them.

Preneed insurance

Preneed insurance is another type of policy you can buy to cover some of your funeral expenses. You buy these whole-life insurance policies directly from the funeral home. With a preneed policy, you choose the services you want for your funeral and buy a policy to cover the cost.

Other alternatives

While it's important to know how your funeral expenses will be paid, don't forget to look at other expenses your loved ones will incur after you're gone.

"When considering final expenses, take a step back and look at the bigger picture," Roberts says. "If you were to pass away, will all the financial needs of your dependents be taken care of?"