Those commercials for “final expense” insurance certainly raise questions in the minds of consumers. Many people wonder if burial insurance is necessary, or perhaps begin to wonder how their own funerals will be paid for. Those are great questions, and each person should do their own research. But here’s some general information to get the search started as you begin to look into the topic of burial insurance.
Isn’t Burial Insurance “Duplicate Coverage?”
You may wonder why a person would buy final expense insurance if their life insurance will cover the cost of a funeral. That seems, after all, like duplicate coverage, doesn’t it?
The truth is that if you already have great life insurance coverage, in amounts that will cover your final expenses, your outstanding debts and whatever is necessary to provide for your survivors, you probably don’t need burial insurance. But that’s a personal decision you’ll have to make for yourself.
If, on the other hand, you have little or no life insurance, and a serious health condition won’t allow you to purchase more, final expense insurance may be a good option. Many burial insurance policies are “guaranteed issue” meaning you can’t be refused coverage. The trade-off, however, may be much higher premiums than standard life insurance. As you investigate this kind of insurance, ask each company three things:
• Will I be required to have a physical examination prior to coverage?
• What kind of premiums will someone my age in my physical condition expect to pay?
• Is the policy guaranteed issue?
Is “Final Expense Insurance” the Same Thing?
Although we’ve used the phrases “burial insurance” and “final expense insurance” interchangeably in this article, the truth is there are differences between the two. Burial insurance, as the name indicates, is written in amounts appropriate to cover the average funeral service. Final expense insurance typically is meant to cover the expenses left behind by the deceased. That could include credit card debt, funeral expenses, legal expenses, or anything not paid for by traditional life insurance. As you begin to research this type of coverage, ask which kind of insurance the companies are selling and in what amounts the policies can be written. Again, either type of insurance will probably be more expensive than typical life insurance.
Why Not Just Pay for the Funeral with Available Funds?
If you’re asking that question, you’ve probably either never planned a funeral or have substantial money set aside for emergencies. If it’s the first situation, you may not realize how expensive a simple funeral can be. You can expect to pay for: transportation of the deceased to the funeral home and to the gravesite, rental of funeral cars or limousines, embalming and preparation of the remains, flowers and memorials, use of the church or funeral home, payment to the person officiating at the service, opening and closing the gravesite, cost of the casket, vault and memorial marker, and a whole host of miscellaneous fees attached to funerals and burials.
At this point, you may be considering cremation as a more affordable option. As you’re looking into burial insurance and how much you’ll need for final expenses, be aware that the standard funeral in America costs $3000 to $10,000, and cremation can cost anywhere between $1000 and $4000, on average.
The final decision whether or not to purchase burial insurance is yours. Contact several companies, should you choose to purchase insurance to cover final expenses, and make sure you understand how their premiums are set and what their policies are meant to cover. With that information in hand, you’ll be able to make a decision that’s appropriate for you.