Funeral Insurance

Planning a funeral is no easy task. Not only is it an emotional and intimate task, but the sheer technicalities of it can be daunting and outright off-putting. However, it is important to consider what is required for your final expenses and how you can make sure that those expenses are tended to once the time comes. The following is some information that touches upon the most common questions asked about buying funeral insurance.

 

Why Choose Funeral Insurance?

Simply put, prepaid funeral insurance provides many benefits including peace of mind for you and your family. Funeral insurance allows you to choose the services you want to be taken care of, which avoids putting the burden on your loved ones at the time of passing. Also, if you don’t have extensive savings and no other means to pay for a funeral, funeral insurance can avoid shifting the burden of your final expenses to your family. Instead, you can make affordable payments when you can for the services you want.

The most important thing is to understand exactly what you want for your funeral or burial. Overpaying for services you don’t need, or not covering the entirety of your final expenses, can be equally upsetting. Once you have made a decision on what type of funeral you would like, you can examine the different types of policies available and see which one makes the most sense for your service needs and your financial capabilities. Making these difficult decisions ahead of time ensures that your legacy will be preserved and your memory cherished in the right way by your loved ones.

  • Funeral Planning Checklist
    Communicate Your End-of-Life Wishes
    List of steps for preparing a will and arranging a funeral or memorial service so that you have a complete end-of-life plan in place.
  • View the Checklist

What Does Funeral Insurance Typically Cover? Plans vary but, typically, funeral or burial insurance covers the following:

  • Funeral Director Fees
  • Death Certificate and Permits
  • Casket or Urn
  • Cost of Cremation
  • Cost of Embalming
  • Digging and Filling the Grave
  • Headstone and Burial Vault
  • Cemetery Plot
  • Flowers and Decorations
  • Hearse and other Transportation

Talking to your loved ones about your end-of-life wishes will help keep the burden from your shoulders, since you know your wishes will be carried out exactly as you want them to be. Your family will not have to deal with funeral arrangements in an emotional state when the time arises. The inevitable future won’t be so hard on your loved ones if you choose to pre-plan and purchase a pre-need insurance policy.

Recent Funeral Insurance Articles

Want more information on pre-paying for a funeral? Read all of our funeral insurance articles.

Learn more about the funeral insurance options available for pre-paying funeral expenses.

Funeral Insurance Topics

Funeral Insurance provides you with piece of mind for your family. Upon death a lump sum benefit to your family, or nominated person, will be paid to alleviate the burden of funeral costs. Purchasing insurance to finance your funeral may seem like a no-brainer because death is inevitable. However, funeral insurance is not right for everyone. There are a number of insurance options available, including: pre-need, final expense, term life, P.O.D. accounts, and more. Read the topics below to learn more about each option.

Pre-Need and Final Expense

Articles on how to pre-pay for funeral expenses with pre-need or final expense insurance.

Life Insurance

Articles on how a whole or term life insurance policy can be used to pay funeral expenses.

Trust and P.O.D. Account

Articles on how a funeral trust or P.O.D. account can be created to save for a funeral.

Types of Funeral Insurance 

Depending on your needs and requirements, different types of funeral insurance exist. The most common types of funeral insurances are:

Pre-Need InsurancePre-need is a type of contract usually bought through the funeral home directly. Desired services and expenses are discussed and agreed upon with the funeral home.

Many prices are guaranteed on basic services like overhead, embalming, or cost of a hearse. Other prices, such as newspaper announcements and flowers, however, may not be guaranteed. Therefore, it is important you make sure to understand exactly which prices on the quote are guaranteed, which are not, and who would pay any costs not included in the plan at the time of need. Another thing to keep in mind is to understand if you can transfer the plan to a different funeral home or cemetery should you ever need to, and if you can cancel the contract (and at what cost).

A major benefit of pre-need plans is that the carrier pays death benefits right away, as opposed to traditional life insurance that can take up to two months. Another benefit is that you can plan every last detail of your funeral with pre-need insurance and that all your requirements are met exactly.

Final Expense Funeral InsuranceFinal Expense Insurance is similar to a pre-need plan except that you buy the plan through an insurance company instead of buying it from a funeral home. The insurance can be taken out for any amount you want, making it easier to gage what you can and cannot afford.

There are two types of final expense insurances: permanent life and term life insurance. The former provides lifetime coverage, the latter covers the premium policy’s term only (usually between 10 and 20 years). Furthermore, you can choose between a simplified issue plan and a guaranteed issue plan. For a simplified issue policy, you will have to answer health-related questions. In that case, the insurance company might include “graded death benefits,” which causes the insurance premium to increase over a period of time.

Life InsuranceTwo types of life insurances exist, Whole Life Insurance and Term Life Insurance. Whole Life Insurance guarantees a fixed amount of money that will be paid out to the beneficiary at the time of the policy holder’s passing. This type of policy is usually extremely costly and has stringent health requirements. Term Life Insurance also pays a fixed amount to the beneficiary, the caveat being that the policy’s holder passes away during a previously pre-determined time window. The risk for this type of policy being typically lower, it is cheaper and health requirements aren’t as strict. You can also renew your policy when it expires, making it possible to compare prices at the time and to switch providers.

 

Guaranteed vs. Non-Guaranteed Plans

A recurring distinction between plans that is important to understand is guaranteed and non-guaranteed plans:

Guaranteed PlansA guaranteed plan allows you to buy services and merchandise at a fixed price that are guaranteed to be delivered at time of death with no additional cost, regardless whether the prices for those services and merchandise have increased since they’ve been purchased. 

Non-Guaranteed Plans: A non-guaranteed plan means that you set aside money in advance to be paid out for funeral services at the time of death. No “fixed” prices or price-guarantees exist for such plans; the existing prices at time-of-passing have to be paid.

Typically, guaranteed plans are taken out for services rendered by the funeral home directly, while non-guaranteed plans are used for third-party providers, such as florists, newspapers or crematories, and are paid by the funeral provider on behalf of the deceased.

 

Other Alternatives

These alternatives are usually less common, but might suit your needs better:

P.O.D. AccountA P.O.D. or “payable upon death” account is a savings account, checking account, or certificate of deposit that names a beneficiary to receive whatever funds are left in the account at the time of the account owner’s passing. The advantage of the P.O.D. account is that you control the funds completely for as long as you live. You can also change or add beneficiaries before you pass.

Funeral TrustA Funeral Trust is a direct contract between you and a funeral provider, typically your funeral home. The funeral home will fix the price of its services at an agreed upon price that can be paid with cash, bonds or life insurance. There are two types of these funds: revocable and irrevocable trusts. The former can be changed or cancelled at any time, whereas the latter doesn’t allow changes. You won’t be able to access the funds at all except to pay for the previously agreed upon funeral.

 

There are many advantages and disadvantages to prepaying for a funeral. Funeral insurance provides numerous benefits, but isn't right for everyone. Before selecting a funeral insurance policy learn about all of the types of insurance and payment options available to you.

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