The cost of a funeral is not something that most people think about, but it can put a significant financial strain on any family. Obtaining funeral expense insurance is something to think about for anyone who is in their 50s to 80s. The sooner you start insuring yourself and your family, the less negative impact it will have on your family’s financial future.
What is Funeral Expense Insurance?
Funeral insurance is a type of life insurance policy that is available for smaller amounts than a regular life insurance. This type of insurance isn’t intended for anyone who is a breadwinner or is raising a family. It is not intended to pay off your family in the event of death or an accident to you, the policyholder, to support your family’s needs. A life insurance is essentially meant to cover your financial obligations in the event that you are unable to work anymore.
As the name implies, funeral expense insurance is intended to cover the expenses in the event of a person’s burial. It is principally intended for seniors with a tight budget and with declining health. This product is also intended for those without savings or life insurance to pay for their funeral expenses. It is meant to protect the family left behind from the burden of the funeral costs.
Unlike most types of insurance, this does not require an extensive medical exam in order for you to qualify. You may be asked to answer a few basic health questions. Some insurance providers might not even ask questions at all. They will determine the rate using a predetermined set of factors such as age or gender.
As you would expect of any insurance product, there are various limitations on the policy. Take time to read about the conditions of your policy so you are aware of how you may qualify.
Pros of Funeral Expense Insurance
These are some of the benefits of buying funeral expense insurance.
Secure expenses for funeral
This is the primary benefit of buying funeral expense insurance. The average cost of a funeral is expensive, with a median cost of $7,600 (as of 2019). It does not even include the vault, which is required for a burial. Even cremation is expensive, with costs ranging from $5,000 to $6,500 (including the urn).
Knowing the costs of a funeral, you can see how it can put a tremendous burden on the family you left behind if you did not obtain this insurance. It is a practical expense that you can shoulder now so that your family won’t carry the financial burden later when you die.
Peace of Mind
Obtaining funeral expense insurance will give you peace of mind knowing that your burial will be taken care of. Your family won’t need to worry about the expense, especially in the case of accidental deaths. You can be at peace knowing that everything has been paid for.
Buying Insurance is Cheaper
The median cost of a burial is expected to appreciate over time. The average cost in 2019 for burial expenses was at over $7,600. This cost could easily double in a few years’ time. If you want to save on burial expenses, then buying your insurance policy now is a practical choice.
Qualifying is Easy
Unlike life and health insurance policies, funeral expense insurance is easy to qualify for. Some insurance providers will ask you to answer health-related questions upon applying for a policy, while others will not.
Death is an inevitable part of life and everyone will eventually die at some point. This is the reason why insurance providers are not as strict when it comes to screening policyholders because it is something that applies to everyone at some point.
Cons of Funeral Expense Insurance
There are plenty of benefits that you can get when you buy funeral expense insurance. However, you need to be very careful when choosing an insurance provider to make sure that you don’t suffer common pitfalls.
Since there is no health exam required upon application of the policy, you won’t qualify for discounts. Whether or not you are in good health, you will be paying the same premium.
Graded Death Benefits
The amount of benefit you get on your insurance policy will vary according to the time of your death. Some insurance companies will pay only a percentage of your actual premium benefits if the policyholder dies within two years after buying the policy.
The actual limitations here will vary from one insurance provider to another. Make sure you fully review the terms before you agree to a policy.
How Much Does It Cost?
The cost of a funeral and the succeeding burial (or cremation) can cost upwards of thousands of dollars. This is why it is practical to invest in this product in order to spare your family the financial hardship in case of your death.
If you are choosing funeral expense insurance policies, it is important to know the cost so you can choose according to your budget. The benefits your family can get can range from $5,000 to $25,000, depending on the type of policy you applied for and the premiums paid.
When getting funeral expense insurance, you can choose to pay monthly installments or via lump sum. There are some insurance providers that collect weekly payments. You can choose a payment structure that is most suitable to your financial situation.
The cost of insurance premiums can start at $40 per month. This can go up or down based on the various factors that are unique to every case.
Most people rely on their life insurance to cover their funeral expenses so that their family won’t have to pay for it out of their own pocket. However, funeral expense insurance is a specific type of product that is designed for this purpose, so you can get the maximum coverage you need.
If you want to protect your family’s financial future, talk to your insurance advisor about the pros and cons of this type of insurance to help you decide if it’s right for you.