Which policy to purchase, and whether or not to purchase funeral insurance is probably not an easy decision. That is because, just like any other insurance, funeral insurance also has its own vocabulary. To assist, do some research for yourself. Here are some things you may find useful.
The first thing you should think about is a whole life policy. A whole life policy gives you coverage for your whole life. So if you die, your beneficiaries will get your premium money plus your face value, if there was a cash surrender value in place. If you choose a term policy instead, it pays a cash surrender value for a specified term. Your beneficiary will get the same amount, at the same rate, whether you decide to surrender your coverage before a certain point in time or even after your death. Usually, term policies cost less per month than whole life policies.
Another thing to think about when purchasing funeral insurance is what type of layout you want. You’ll want to choose between a deductible and a per claim payment. If you have no other debts after paying your expenses, you may not need a high deductible. Or maybe you have a lot of small expenses that you don’t anticipate having a lot of time to pay. If this is the case, a lower deductible will be better for you financially.
Other things to consider are the types of expenses covered by your policy. Most policies will cover funeral costs, which include embalming, cremation, the payment of a casket, burial and other related expenses. However, some policies will also cover the mortgage interest on the deceased’s home, so it may pay to leave behind enough money to pay off mortgage payments. Other potential deductibles could be credit card debt. Just remember that in the case of your death, all debts will need to be paid off.
There are two types of funeral insurance policies that are most common. The first is called a guaranteed issue policy, which means the funeral expenses will be paid for up front, even if the person passes away within a short time period. The second is a simplified issue policy, which means the policy will only cover certain standard final expenses. These are usually funeral services, embalming, burial and other related services.
Some other options available to you are: the installment plan, which are less expensive; a savings plan, which offer less flexibility; and the limited service funeral insurance policy, which provide more choices in terms of coverage. With the exception of a few things, such as burial, cremation and funeral expenses, the basic concept behind all funeral insurance policies is the same. This is the protection of funeral costs in the event you pass away. As with any type of insurance policy, you will want to research the different aspects of the policy, as well as understand what each type of policy offers in terms of protection.
Although there is very little difference between a life insurance policy and a funeral insurance policy, the way you can select a funeral option may be different. Life insurance typically provides you with a financial aid in the event of your death, while funeral plans will pay out the majority or all of your final expense insurance costs. Also, pre-need trusts allow you to set aside money to cover final expense costs if your death is unexpected or unplanned. However, pre-need trusts do not offer any cash savings benefit, so you would have to provide a large sum of money as a down payment to secure the loan.
If you have some specific family business expenses that are not considered final, then a traditional life insurance policy may be the best option for you. Your family will still get the money they are owed should your death occur while they are still holding the title to the property. However, if you die during the time your family is attempting to settle your estate, then the property can be transferred to your agent or beneficiaries, but you will lose the funeral expenses you were entitled to. A funeral insurance policy is your best choice for protecting your final expenses. It provides the peace of mind of knowing that your family will not be financially burdened should something unexpected occur.