Should I consider funeral insurance?

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Funeral insurance, also known as final expense or burial insurance, is a type of life insurance that provides funds to a person’s survivors for the purpose of covering the expenses related to carrying out a person’s final wishes. This is especially applicable to expenses related to a funeral and burial.

Funeral insurance normally carries a low face value such as $ 5,000 to $ 50,000 with a beneficiary such as a family member who would make a claim on the policy and be paid upon the death of the insured. this money would, in turn, be used to pay funeral and related expenses. If the insurance payment is more than the costs incurred by the funeral, the remainder of the cash can be kept by the beneficiary to use as they wish. Since the beneficiary can legally use this cash any way they wish, make sure you trust your beneficiary. Otherwise, your final resting place may be in a paper sack.

Last Wishes

Most people purchase funeral insurance prior to their need. This obviously takes the concern for these expenses off of the survivors when they are most vulnerable and often unable to cover the costs. This also gives the person covered the ability to ensure that they get the arrangements they want. This should not be confused with “pre-need insurance, which covers funeral and burial costs after they have been specifically chosen by the policy holder.

If a person is in ill health when they purchase this coverage, a policy called a “graded death benefit,” or “grab and go” policy can be purchased. This type of policy carries a benefit that gradually increases as time passes between the time the policy is ordered and the time of death.

Life Insurance Will Do It

It is important to remember that any monies that your beneficiaries receive from a life insurance payout can go towards funeral and burial expenses, but many people buy a separate policy for burial and funeral expenses to make sure that other insurance monies are guaranteed to go to the beneficiary. Funeral insurance is also offered at a lower face value than other types of life insurance.

Many financial advisers have their clients purchase a larger life insurance policy that will cover larger encumbrances such as a mortgage, college costs, and other expenses that will be dealt with by the survivors as well as the final expenses. Without these expenses, however, a final expense life insurance policy is a good idea.

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