subject: Term Life Insurance Funeral Coverage [print this page] Term Life Insurance Funeral Coverage
Many people are under the impression that term life insurance does not cover funeral expenses. This is partway true, depending on the length of the policy and where the insured stands in their payments. Term life insurance differs from whole life insurance in a few ways but the most obvious is that it is only payable during the life of the policy. Once a whole life insurance policy premiums are paid off it pays no matter how much time has lapsed. With term, once the contract has come to fruition, the policy is no longer valid.
How does term life insurance funeral coverage work?
Term of Policy A term life insurance policy is set up for a set amount of time which is where it gets the moniker of "term". When purchasing this type of policy, it is important to know the terms of the contract before signing it or committing to it. If you are purchasing a five year policy then the payments are made each month for five years and it is only payable if the payments are on time and if the holder passes away within this time frame. There are extensions available for those who need a longer contract after the first one expires.
When Does it Pay? This contract only pays off if there is a death within the frame of time of the policy. This is not a policy that allows the holder to cash it out early for emergency expenses. It cannot be borrowed against either and holds no monetary value other than the policy amount in the event of a death.
Funeral Expenses In the event of the policy holder's death during the term of the policy, the beneficiaries can use the payout to take care of the costs of the funeral arrangements and burial. Any excess amount that is left over from the policy can be used to keep bills up to date or can be saved for any survivors to use in the event of an emergency.
Term life insurance funeral coverage is a great way to insure that your family is taken care of if you pass away. Do not leave them in the dark having to borrow money to take care of these expenses. Just remember that it only pays for the duration of the policy and if payments are missed or it expires, the cost is not covered any longer.
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