Inflation for Funeral Costs

[PA Bill]

Going from $2,000 to $4,000 is exactly the same as going from $10,000 to $20,000. There is no difference and it feels exactly the same to the consumer.

Think about the price of cars in your lifetime. $2,000 bucks got you a nice new car when we were young. Every time they have doubled it has felt the same.

Yeah man. Thirty years ago, $1500 could buy you a sweet, used Cutlass Supreme or Caprice Classic.

 

[rousemark]

Just so you know why I've said what I said, I think it's common sense. My reasoning may be off, but I don't think it is. Would have to really investigate it to see.

I'm sure that back in the day, the prices of funerals did actually double every 10 years. Too many old agents talked those numbers, so I'm thinking it was actually true at some point. All I'm saying is that it reached a point to where it did not double every 10 years. If it had kept on track for that the costs would be much more significant today.

Think of it this way: A $500 funeral doubled to $1000 in 10 years. That's $500 over 10 years or around $50 per year increase. Sounds fairly reasonable.

Now you take a funeral average of $10K today. In ten years (if doubled) it would be $20K. That's an average increase of $1000 per year. That's a far cry from the $50 per year increase in the previous example.

All I'm saying is that when the price gets to the point to where the increase just doesn't make sense then that increase isn't going to happen like it did back in the day. The market wouldn't justify it. At some point it just becomes ridiculous and it won't happen. Inflation may be a certain percentage, but it doesn't mean that everything that is sold increases by that percentage. That's all I'm trying to say.

Todd, having been around when there were $500 funerals, I can tell you people were really shocked when they eventually reached $1000. That $50 per year increase didn't seem reasonable to them at all.

 

[Newby]

Todd, having been around when there were $500 funerals, I can tell you people were really shocked when they eventually reached $1000. That $50 per year increase didn't seem reasonable to them at all.

I can send you reciepts from when a complete funeral with hardwood casket and a horse drawn funeral coach was $7.50.

That $1 per increase was not taken lightly.

 

[rousemark]

I can send you reciepts from when a complete funeral with hardwood casket and a horse drawn funeral coach was $7.50.

That $1 per increase was not taken lightly.

Contrary to what all of you think, that really was before my time.

 

[VolAgent]

Contrary to what all of you think, that really was before my time.

Who are you fooling? I have Daguerreotype of you with the horse.

 

[Todd King]

Youre still focusing on the dollar increase, when in reality that has no bearing on when something will double.

Here is a calculator to help:

The Rule of 72 (with calculator) - Estimate Compound Interest

I very well know the rule of 72. Look back over the history of funeral increases and you'll probably find that you couldn't begin to use the rule of 72 to calculate the rate increases. Won't fit this scenario...sorry.

Okay, for those of you who continue to disagree with me (not saying that you're wrong or that I'm right), go back in time when it was actually doubling every 10 years (just a starting point). Find the rates of inflation for those years. Continue to apply the rates of inflation since that time and see what the costs of funerals would actually be if they followed inflation rates.

Hell, I've been doing this for right at 20 years now and I promise the funeral rates have not doubled twice! If they had you would probably be looking at about $24-30K average right now. They haven't even doubled once.

Over the past 20 years the rate of inflation has averaged 3.22%. That makes rates double about every 20 years. Has the cost of funerals kept up with this inflation? NO!

 

[KRobby]

Lots of good info..

Wonder how many of you actually bring up the inflation/future costs discussion in a presentation.. I've heard both sides, some that do every time, and others that never do. I have mixed feelings. I can understand the value of informing them it will likely be more expensive than today's costs. Slightly larger policies and doing them a service!

But at the same time, a major point of life insurance is to protect the unexpected (the untimely death that would not be affordable), so painting a vision of a predicted future distracts from that. Also it's probably a challenge to keep these things simple to understand for this market. Annuity market is another story!

 

[BoJax]

I very well know the rule of 72. Look back over the history of funeral increases and you'll probably find that you couldn't begin to use the rule of 72 to calculate the rate increases. Won't fit this scenario...sorry.

Okay, for those of you who continue to disagree with me (not saying that you're wrong or that I'm right), go back in time when it was actually doubling every 10 years (just a starting point). Find the rates of inflation for those years. Continue to apply the rates of inflation since that time and see what the costs of funerals would actually be if they followed inflation rates.

Hell, I've been doing this for right at 20 years now and I promise the funeral rates have not doubled twice! If they had you would probably be looking at about $24-30K average right now. They haven't even doubled once.

Over the past 20 years the rate of inflation has averaged 3.22%. That makes rates double about every 20 years. Has the cost of funerals kept up with this inflation? NO!

Check out the nfda website. I think you're wrong bases on info from there. It says from 1980 to 1989 funerals increased 89.4%.

 

[rousemark]

Here is an interesting site.. Funeral cost have not doubled in the last 10 years. Increased by 280%

http://www.in2013dollars.com/Funeral-expenses/price-inflation/2007-to-2017?amount=1000


Went up 90% over the last 20 years.

http://www.in2013dollars.com/Funeral-expenses/price-inflation/1997-to-2017?amount=1000

 

[Newby]

I've been selling funeral for 20 years now. It's definitely regional on pricing. But in my town we sold a standard funeral all day long for $5,500 in 1997. That same funeral sells for $9500 today.

Funeral inflation has been low during that time partially because of increased competition (price advertising) and also the internal competition from direct burial and direct cremation.