The problem with talking about funeral insurance plans is that it means we need to confront our mortality. Sounds like a fun topic for dinner conversation, right? There’s another way to look at it, though. Rather than thinking about our eventual demise, approach the topic from the mindset of taking care of the loved ones who will be here mourning you. Funeral insurance takes so much of the financial and planning burden away from those you care about.
First, however, it’s important to point out that many insurance plans get lumped into similar categories. But the insurance industry does a truly fantastic job of tailoring insurance products for different scenarios. Funeral insurance plans are an excellent example of this. People would expect funeral insurance plans and burial insurance plans to be the same in many cases, but there are significant and subtle differences.
Getting these differences clear when looking into any final expense insurance is essential to understanding how the insurance will function for you. These policies work similarly to life insurance but have features that can make them preferable to life insurance in specific scenarios. Especially if you already have a life insurance policy that you intend for other purposes, these final expense policies can be ideal for relieving survivors of a financial burden.
Knowing the differences between funeral insurance plans and burial insurance plans
Both funeral insurance plans and burial insurance plans provide money at the death of the insured. Death benefits for either of these policies will usually be between $5,000 and $25,000. There is a possibility that a policy could offer up to $50,000, but that’s not as common.
Each policy can come as term insurance (where you pay the same premium for a certain number of years, but the policy could lapse) or permanent insurance (where you pay a recurring premium – usually higher – but it will not lapse). The difference between the two policies comes with how they pay out the death benefit.
Beneficiaries receive a direct payment for a burial insurance policy, and they can use those funds however they decide. Therefore, if the insured wanted the benefit to go towards a funeral or cremation, the beneficiary does not necessarily need to fulfill those wishes. Funeral insurance plans (sometimes known as Preneed Funeral Insurance) are often paid directly to the funeral home to ensure the money is going towards that need.
Costs associated with plans often vary by age and sex, and, as you can imagine, often increase with age. If you or a loved one expects to get a form of insurance for end of life planning, then doing so earlier than later can help keep monthly premiums down.
Recognize important details while looking for funeral insurance plans
There are many things to pay attention to in any insurance policy, and that’s also the case with these final expense policies. You need to know whether you are paying for term insurance or permanent insurance and how that impacts your premium payments.
Some policies will remain in force for your entire life once you pay them in full. Understand which of these policies are best for you and your current situation before coming to a rash decision because you feel you need one. Just because a policy will provide you with the funds that you want to leave to your family doesn’t mean that it’s the best policy for you to put your money into.
Why are you looking into final expense policies now? Do you know what you can afford to spend on monthly premiums?