The passing of a loved one carries with it tremendous grief and sorrow, but if that person was the breadwinner of the family, it also has a financial burden that may cause considerable debt and hardship on its own.
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To prevent the burial cost, loss of income, and potential debt from becoming too high, there is funeral insurance.
What is Burial Insurance?
This is similar to life insurance, but the burial insurance cost is far less, and the amount generally covers the cost of the funeral itself. With the average cost of a funeral being roughly $9,000, having burial insurance provides a financial cushion that allows for the loved one to be buried in a manner of their choosing.
Since the money is provided directly to the beneficiary, it can be used for other expenses ranging from paying off debt to leaving behind a small legacy for their children.
How does It work?
There are different types of burial insurance policies and choosing the right one will mean knowing your current financial situation and knowing what works best for your family.
Standard: This is a policy that pays from $5,000 to $10,000, but otherwise quite similar to standard life insurance.
Preneed: This is usually linked to a funeral service and consists of a series of payments over a one to ten-year period that remains in effect after all premiums are paid. You can choose between a term or permanent policies, but keep in mind that once the full amount has been paid, it is ready to be used.
These prepaid burial plans often include the type of funeral you want so that your wishes can be fulfilled.
Final Expense: This is insurance that is not linked to a funeral service, but it is less expensive compared to preneed policies. Like life insurance, you can choose term or permanent policies that best meet your financial needs.
It should be noted that term insurance lasts for a pre-designated period, generally from five to thirty years. A permanent or universal policy will continue for the rest of your life and offers an accumulation feature which means that it generates cash as it grows.
Why You Need Funeral Insurance
Burial expenses can be higher than most people are prepared to pay, which is why having funeral insurance is so important. For families that are on tight budgets or living paycheck to paycheck, having low-cost insurance that covers funeral expenses can be quite helpful.
In addition, you can better plan your funeral so that it meets your wishes. Working with a funeral director in coordination with preneed insurance offers a good start and peace of mind. In addition, you can take advantage of different types of plans, such as funeral insurance with cancer for example that provides additional coverage when needed.
If you are living on a tight budget, funeral insurance may be exactly what you need to protect your family from the financial burden of your burial expenses. Be sure to take the time and look for the right policy that meets your needs while fitting your budget.