Are you with the understanding that the Canada Pension Plan Death Benefit will pay the final expenses to a funeral home, after you’re gone from this life?
Although you might be thinking “the Canadian government will pay my funeral costs; after all, I paid into CPP all my life” – the facts state otherwise.
It seems to be a common belief that upon death – all Canadians are entitled to the Canada Pension Plan (CPP) Death Benefit; that the benefit is payable to the funeral home to cover final expenses. Unfortunately, that just isn’t the case.
6 basic facts about the CPP Death Benefit
- The deceased had to have paid into CPP for at least 10 years since 1966
- The maximum one-time benefit is currently $2,500
- The CPP Death Benefit is taxable
- The CPP Death Benefit is not paid to the funeral home by the government; it is paid to the estate of the CPP contributor
- Application for the Death Benefit can only be made at the time of death, not prior
- Average wait time to receive the Death Benefit payment: 20 weeks or more
The Dying Death Benefit
If you’re assuming the CPP Death Benefit is indexed; I hate to be the bearer of bad news. The 1997 reforms actually reduced the one-time CPP Death Benefit from $3,580. to the current maximum amount of $2,500.
Although you may be entitled to receive the CPP Death Benefit; it usually falls short of what final expenses typically cost and it’s taxable, leaving even less of a benefit. That’s correct; the CPP Death Benefit is taxable income.
Apply for your Serenity preplanned protection to cover final expenses rather than relying on the dying CPP Death Benefit. A low-cost, flexible and non-taxable plan will lock-in and guarantee the future cost of your final expenses without any eligibility concerns.