Most people already know what it means to take out a life insurance policy, but it’s not the only end-of-life insurance option on the market. In fact, one of the questions I hear most often is about the difference between funeral insurance (or burial insurance, as it’s commonly known) and life insurance. How are they different? Which one is better? Why is one so much more expensive than the other?
The easiest answer is this: funeral insurance is insurance designed to pay for the funeral. The funeral insurance policy can be as small or as large as you need it to be to pay for things like the casket, burial, funeral home services, and the gravesite. It can even be used for cremation, if you, like so many other people these days, are looking for something that’s lower in cost and in impact on the environment.
Of course, from there, funeral insurance coverage can (and will) vary. Depending on your needs and your financial situation, here’s a rundown of everything you need to know.
- What is funeral insurance? Simply put, funeral insurance is an insurance policy that pays out upon your death and can be used to cover your funeral costs.
- How is funeral insurance different from life insurance? A life insurance policy is meant to be a long-term financial solution that provides an income for your family after you die. Funeral insurance is a much smaller (and lower-cost) policy that covers your final expenses.
- How much does funeral insurance cost? Funeral insurance costs vary depending on your financial situation and your funeral plans. Most policies fall in the $5,000 to $10,000 range, so your premiums will match accordingly. This money can then be used to pay for the funeral (or, if there are other needs, things like medical bills, end-of-life expenses, or even travel for family members).
- Who can take out a funeral insurance policy? One of the best things about funeral insurance is that it rarely requires a physical exam and is offered to older adults who might s are much more flexible in terms of age and health status.
- Who gets the funeral insurance money? Like most insurance policies, you choose the beneficiary of the policy. It can be a family member you trust to plan your funeral according to your wishes, or it can be the funeral home itself. When you choose the funeral
One of the more common questions I hear is about when you should take out a funeral insurance policy—and the answer is right now. If you’re like most people, death and funerals are the last things you want to spend money on. After all, there are so many other financial concerns you need to attend to. That’s why I always suggest you start these plans sooner rather than later. By taking care of these costs while you’re in good health and making other plans for your financial future, you can move on and focus on what really matters.