Burial Insurance - Everything You Need to Know
Burial Insurance - Everything You Need to Know
Although many of us don't like to think about death or dying, some day we must face these difficult circumstances. So that leaves us with two choices:
We All Have Two Choices Before We Die:
1. Do nothing
2. Plan in advance to ease the burden of our loved ones
Just as the name implies, the main purpose of burial insurance is to cover the funeral costs, final expenses, as well as pay off specific obligations or debts.Other terms that are commonly used to describe burial insuranceare funeral insurance, final expense insurance, preneed insurance, and end of life plan insurance.
Burial insurance is generally associated with a permanent type of insurance policy (versus term insurance),and the most common permanent policy used iscalledwhole life insurance.Most whole life policies which are purchasedto coverfuneral expenses range from $5,000 to $25,000.
As you may be aware, funeral costs can be extremely challenging. Some of the most common final expenses wouldinclude the casket, cost of cremation, cost of embalming, a headstone, body and /or funeral transportation, the cost of the plot,the visitation, and much more.
Recently AARP estimated the average cost of a funeral today to be approximately $10,000, which is certainlynot inexpensive, nor is this something thatshould be overlooked or ignored.
Although burial insurance is very similar to life insurance, the most common strategy is to own both types of insurance policies. This way the funeral expenses can be separated from the life insurance proceeds, makingyour last wishes muchmore straightforward as to howyou wanted the life insurance proceeds to help fund or replace.
Key Details to Review and Consider
Even though the policy is called burial insurance, you are in no way forced to allocate the benefit to only the funeral.Since there are usually no restrictions, you candesignate the proceeds to be used for other things, such ashouse payments, debt reduction,estate or income taxes, and more. Thismeans that burial insurance creates multiple opportunities for you toease the pain of your loved ones lives during an otherwise difficult time.
Also, the proceeds of a burial insurance policy are a fixed and guaranteed amount. Since these moniesremainconstant throughout the life of the policy, you alwaysknowexactly how much is going to be there in your loved ones time of need.So onceyou pay the insurance company your premium, there's no need to worry from then on because both the premium price or costand the amount to expect are fixed forthe life of the policy.
Another excellent feature is that the policy is guaranteed and can only be canceled ifyou fail to pay the required premiums payments,orif thepolicywas purchased in afraudulent way.
An Easy-to-Understand Summary of Burial Insurance
Overall, most financial professionals would agree that burial insurance is an excellent addition to an comprehensive financial plan. This insurance is alsoagreat strategy toprotect your loved ones against many of the unnecessary financialand/or emotional lossduring one of the most difficult times in their lives.
Although the concept is very similar to life insurance, burial insurance is actuallymuchmore specific.As the name implies,the intention of these monies aredesigned tospecifically cover the costs of your end of life plan. However, as I mentioned earlier, burial insurance proceeds can alsobe allocated for other purposes if you prefer.
In most cases, burial insurance is a valuable addition to your financial and family planning, which is why more than 65% ofpeople whodecided to preplan a funeral also choose to purchasesome form of burial insurance.
Arguably the best featureis that thiswill endup being one of your families last memories of you. So not only does this insurance serveas financial protection, but it isalsoan excellent way to be remembered by your family and loved ones. The reason why is because they know that you cared about them enough to selflessly takethe time to plan for these funeral expenses in advance. This gift of love providesthemthe abilityto focus on what you would have wanted, which iscelebrating your memories and life's story.
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