Burial And Cremation
Insurance, Final Expenses Insurance – Memorial Service, Prepaid Funeral And
Cremations - Pre-Planning Service, In
Understanding the Different Types of Funeral Insurance
Dealing with the loss of a loved one is difficult and stirs
up a lot of emotions. While you expect to feel sad and go through the grieving
process, you might not be prepared to handle the high costs related to honoring
your loved one's memory.
In fact, you may be surprised that funeral, burial and other services can add up to thousands of dollars. The financial aspect can cause unnecessary stress during a sensitive time in your life. On top of that, there are a myriad options that can become confusing.
Fortunately, you and your loved ones can plan ahead. As part of the preplanning process, you can get financial security with insurance. There are three main types: burial & cremation insurance, preneed funeral insurance and final expense insurance. Since they differ slightly, it's important to understand how each of them works.
Burial & Cremation Insurance
Simply referred to as burial insurance, this type of policy offers coverage for funeral and burial expenses upon your death. Also called funeral insurance, it covers cremation costs as well. Depending on the specific policy that you choose, it will pay $5,000 to $25,000. However, some policies have higher benefits.
In general, a burial insurance plan can cover just one person or an entire family. The beneficiary can be whomever you want, and the insurer will pay the benefit directly to the beneficiary when you pass away. Best of all, your beneficiary can use the money for more than burial costs.
For example, let's say that your burial insurance covers $20,000. In scenario A, your beneficiary might spend all of that benefit on a funeral and burial. In scenario B, the beneficiary may only need to cover $5,000 for a cremation and service. With the other $15,000, your beneficiary can pay off outstanding credit, legal, medical and other debt.
You can get burial insurance from a life insurance company, but some funeral homes offer policies as well. Because of that, you could have the option between a term or life policy. When you apply, you don't usually need to undergo a medical exam first. If you qualify and sign the contract, you'll pay a small weekly or monthly premium, which never changes. Some other benefits include:
- You usually apply for a policy over the phone.
- The coverage starts as soon as you sign the contract and make the first payment.
- You may qualify even if you have health issues.
Preneed Funeral Panning &
Like burial insurance, preneed funeral insurance sets aside funds for your funeral. However, it covers predetermined costs and may even protect against inflation by locking into current prices. The main difference, though, is that is doesn't pay the benefits to a beneficiary upon your passing. Instead, the benefits are paid directly to your chosen funeral provider.
Because of these differences, preneed funeral insurance takes the guesswork out of making funeral arrangements. You work with the funeral provider to make all of the arrangements. As a result, the cost of this insurance is directly related to the options that you choose. When you pay for the policy, it stays in effect for life. Then, your loved ones can focus on healing rather than planning your funeral.
Final Expense Insurance
Final expense insurance is more like burial insurance than preneed funeral insurance. The reason is that you pay a premium for the policy and get to name a beneficiary. Also, most policies cover $5,000 to $25,000 in expenses depending on what you choose, and they're effective as soon as you sign and make your first payment. Because of that, scenarios A and B above apply to this type of insurance plan as well.
However, a difference with final expense insurance is that the policies typically have medical or age limits. For instance, you might pay a higher premium if you have certain health issues. Despite that, you don't have to undergo an exam to qualify for a policy. Instead, you must swear that, to the best of your knowledge, you're in good health.
Other Preplanning Cremation & Funeral Factors to Consider
If you have trouble choosing between these insurance policies, it can help to consider the other factors that go into preplanning a funeral. Mainly, knowing whether you want to be buried or cremated can lead you in the right direction.
When you choose burial, your funeral expenses could be much higher than if you choose cremation. Some of the fees include the burial plot, grave liner, groundskeeping, perpetual care and other maintenance. Of course, you also have to purchase a casket.
With a cremation, you don't have to worry about burial plot expenses unless you want your remains buried. However, you'll need a casket or alternative container to use for the cremation. You also need a container for your cremated remains. There are a range of options at a variety of price points.
Prepaid Cremation & Funeral Services
In addition to these burial and cremation expenses, there are fees for viewing, memorial and funeral services. However, you can spend as much or little as you want on these options. After considering these factors, you'll have a better foundation on which to make a decision for funeral insurance.
© By Jennifer Connell