Dealing with the passing of a loved one is never easy, but having a burial insurance policy can at least take some of the financial burden off of grieving family members. Burial insurance, also known as final expense insurance, is specifically designed to cover the costs associated with a funeral, burial, or cremation.
What is Burial Insurance and How Does It Work?
Burial insurance is a type of life insurance policy that is specifically designed to cover the expenses of a funeral, burial, or cremation. This type of policy typically has lower coverage amounts than traditional life insurance policies, but the premiums are also much more affordable.
With a burial insurance policy, you choose the coverage amount that you would like to have. In the event of your passing, your designated beneficiary will receive a lump sum payment that can be used to cover final expenses.
How Much Coverage Do I Need?
The amount of coverage that you need will depend on a variety of factors, including your age, health, and the cost of funeral services in your area. As a general rule, it is a good idea to have enough coverage to pay for a basic funeral and burial or cremation. According to the National Funeral Directors Association, the median cost of a funeral with viewing and burial was $7,640 in 2019. For a cremation with a memorial service, the median cost was $5,150.
When deciding how much coverage to purchase, it is also important to consider inflation. Funeral costs have been increasing at a rate of approximately 3%-5% per year, so it is a good idea to choose a coverage amount that will keep up with these rising costs.
What Factors Affect Burial Insurance Rates?
The cost of burial insurance premiums can vary depending on a number of different factors. Some of the factors that can affect your rates include:
- Your age
- Your health status
- Your gender
- The amount of coverage that you choose
- Your location
In most cases, the younger and healthier you are, the lower your premiums will be. Women also tend to pay lower premiums than men, since they have a longer life expectancy.
Types of Burial Insurance Policies
There are two main types of burial insurance policies: simplified issue and guaranteed issue.
Simplified Issue
A simplified issue burial insurance policy requires that you answer a few health questions on the application, but there is no medical exam required. These policies are typically less expensive than guaranteed issue policies, but you may be turned down if you have certain pre-existing conditions.
Guaranteed Issue
A guaranteed issue burial insurance policy does not require a medical exam or any health questions. As long as you meet the age requirements, you will be approved for coverage. While these policies are more expensive than simplified issue policies, they can be a good option for those who have been turned down for coverage elsewhere due to health issues.
How to Choose the Right Burial Insurance Policy
When choosing a burial insurance policy, there are a few factors to consider:
- The amount of coverage that you need
- Your age and health status
- Your budget
- The reputation of the insurance company
- The terms and conditions of the policy
Be sure to compare rates from multiple insurance providers in order to find the policy that best fits your needs and budget.
FAQ:
What is the difference between burial insurance and life insurance?
While both types of policies provide a death benefit to your designated beneficiary, burial insurance is specifically designed to cover the costs associated with a funeral, burial, or cremation. Traditional life insurance policies can be used for any purpose, including paying off debt, providing an inheritance to loved ones, or covering everyday expenses.
Do I need burial insurance if I already have life insurance?
It depends on the amount of coverage that you have and the specific needs of your loved ones. If your life insurance policy provides enough coverage to pay for your final expenses, then you may not need a separate burial insurance policy. However, if your loved ones would struggle to cover the cost of your funeral or final expenses without assistance, then a burial insurance policy could be a good investment.
Can I purchase burial insurance for someone else?
Yes, you can purchase a burial insurance policy for someone else. However, you will need to have their consent and they will need to be aware that they are the insured party.
Conclusion
As you can see, burial insurance can be an important investment for those who want to ensure that their loved ones are not burdened with the costs of a funeral, burial, or cremation. By understanding the factors that affect burial insurance rates and choosing the right policy for your needs and budget, you can have peace of mind knowing that your final expenses will be taken care of.
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