Nobody wants to discuss their funeral, but a financial plan for the last days of your life is one thing to think about. When you will be no more and will leave your close ones for grieving, you may not want to burden them with the financial obligations related to your burial or funeral.
There are two common funeral expenses related to life insurance policies: burial insurance and funeral insurance. They are almost the same except for some key differences. Let’s see how these two are different from each other. Although the two plans are nearly the same, the key differences will help you choose one policy.
What is Burial Insurance?
Burial Insurance policy covers all the costs related to your burial or cremation expenses after your death. Different providers for this policy will give you different offers. You can choose the way of disbursements; for example, you can go for a short term for payment or take a whole life policy.
Usually, the payout amount for the policy is lower. It has been found within a range of $5000-$25,000, except for a few providers who offer higher benefits.
After the policyholder’s death, the insurer directly pays the beneficiary’s benefit amount, who will use the money to incur the burial expenses and other costs.
If there are balances left after the funeral expenses, the beneficiary can pay for any other outstanding balances.
For instance, hospital bills, doctors’ fees, legal costs, or other debts are unpaid. For example, suppose the benefit amount is $20,000, and the related burial costs are $15,000. In that case, the beneficiary can use the rest of the amount to settle the other expenses owed by you.
Burial insurance is not like a regular insurance policy. A standard medical exam is required to determine the cost of the insurance. But this policy doesn’t need it. Potential policyholders are insured only after a few question-answer session.
What is Funeral Insurance?
Funeral Insurance is more or less the same as burial insurance but works a bit differently. It aims to save your family from the financial obligation and the burden of the funeral arrangement.
For this policy also, providers give options to choose the policy as a long-term policy until death or short-term policy. And it covers all the costs, such as burial services provided by the church, funeral home services, and merchandise for the funeral.
This type of policy also gives protection against rising funeral costs like burial insurance.
For funeral insurance, after the policyholder’s death, the amount of death benefit is paid directly to the funeral service provider instead of a beneficiary chosen by the policyholder. Usually, a funeral home works as the funeral service provider here. The payment is made immediately to incur the cots without any delay. This insurance does a lot more to reduce your family’s obligations giving time to deal with the difficulty.
Whenever you decide that you will no longer continue the installments, you can cancel out the policy. Still, in that case, you will receive a portion of the paid installments back or nothing at all.
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Which insurance will you choose from these two?
Once you have explored the key differences, you can now choose between these two policies according to your convenience. The choice depends on the particular needs of you.
If you do not want your family to leave with any burden to settle after your death, then a funeral insurance policy is more suitable for you. It will also support your family at the time of their grievance and make things complicated after you are gone.
If you think you might have to settle some debts or keep your funeral as per your loved ones’ wish, you can go for burial insurance.
Now you know the slight difference between these two policies, you can clear your confusion and decide on your own. When you think of an insurance policy to manage your funeral costs, any of these two will suit you. Which policy would you prefer? And why? Let the community know in the comment section.