One of the unsettling facts of life is that it eventually comes to an end. That and taxes are your only guarantees. At some point, we all have to think about how we’ll take care of our loved ones in our absence and cover final expenses.
The cost of burial has skyrocketed in recent decades. Indeed, it’s not uncommon to pay upwards of $10,000 for a funeral service and burial these days. Furthermore, depending on your age and health, finding an affordable life insurance policy can be difficult. However, there’s funeral insurance for people who’d find it difficult to get regular term or whole life insurance. Continue reading to learn what you need to know about burial insurance before purchasing a policy.
Funeral insurance isn’t right for everyone.
The first thing you need to know about funeral insurance policies is that they’re not right for everyone. These policies typically range between $5,000 and $25,000, making them enough to pay final expenses and not much else.
If you’re young and healthy and merely looking for life insurance to secure your family’s financial strength in case of your untimely passing, you’d do much better with whole life or term life insurance policies. Indeed, a burial insurance policy for $10,000 can end up costing more than a whole life policy for a young, healthy person. You should only consider funeral insurance if you’re sure your family members will be okay financially without your death benefit payout and you’re either of advanced age or have a terminal illness.
Burial insurance premiums are expensive.
As we hinted in the previous section, funeral insurance policies often have a higher price than many term life and whole life policies of greater value. Final expense policies are for people who need burial coverage and nothing else. People who typically purchase these insurance policies are seniors or have terminal conditions, so these life insurance policies are more expensive.
You don’t need a medical exam to qualify.
The underwriting process for getting life insurance is notoriously invasive. You have to submit to a medical exam, answer questions about your medical history, and answer questions about your lifestyle. The results of your questionnaire and medical exam determine your eligibility for various life insurance products and your premiums.
The great thing about burial policies is that they don’t require a medical exam. Furthermore, some insurance companies won’t even make you answer questions about your lifestyle and medical history.
Your death benefit isn’t guaranteed.
One of the most important things to know about final expense life insurance is that your death benefit isn’t guaranteed. If the policyholder passes within two or three years of purchasing the policy, their family members don’t receive a payout on the life insurance policy. Instead, they’ll get a refund of all your premium payments, and some life insurance companies will even pay back the premiums with interest.
There are other final expense options.
Final expense insurance isn’t the only way to cover the cost of burial services. Payable-on-death (POD) accounts and funeral-need insurance are other financial products designed to cover funeral costs.
Funeral-need insurance is a policy in which you make advanced payments to the funeral home of your choice for your funeral expenses. POD accounts are savings accounts for final expenses for which you can designate someone to access the funds upon your passing.
No one is “itching” to plan their own funeral. However, you can help your family a great deal by making sure you have a plan to cover your funeral expenses and making your final wishes known. If all of your beneficiaries are financially stable, a burial insurance policy is a great way to lift the financial burden of funeral costs off them. With today’s high burial costs, having an insurance policy to cover burial expenses is necessary.