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How Burial Insurance is different than Preneed Funeral Insurance

There are two common types of funeral expense life insurance policies: burial insurance and preneed funeral insurance. These policies are designed for people aged 50-85 who are looking for affordable coverage. Planning, using either one of these types of funeral expense life insurance policies, allows you to cover the costs associated with your funeral and final expenses. This being said, there are key differences between the two. We will cover the basics below to help make the task of deciding which is right for you a little less daunting. Hopefully, you find it helpful in understanding the coverage you need, at a price that fits your budget, so you can get back to enjoying life.

Burial insurance

Simply put, burial insurance (also commonly referred to as final expense insurance) is a type of funeral expense life insurance policy designed to cover the cost of your funeral or cremation expenses when you die. Funerals and final arrangements can cost upwards of several thousands of dollars, but without knowing this many people do not plan. This tool is designed to avoid the type of situation that can sometimes lead to a financial hardship on families or loved ones. A burial insurance policy helps cover the final expenses, so it does not place the burden on children, grandchildren, spouse or other family members.

Burial insurance policies can vary between life insurance companies, so you may find it offered in the form of a term policy or whole life policy. Generally speaking, the death benefits for burial insurance are low, ranging anywhere between $2,000 up to $50,000. After helping place over 250,000 of these policies we have found the average amount of coverage is around $10,000.

At death, the burial life insurance pays the benefit of your policy directly to your beneficiary who can use the money in any manner. For example, if you have a $15,000 burial insurance policy and funeral expenses came in at $10,000, your beneficiary might choose to use the additional funds to pay for other final expenses such as outstanding medical bills, legal costs, or any other outstanding debts you may owe like credit cards.

These policies are sold by the largest life insurance companies in the industry.

Preneed funeral insurance

Like burial or final expense insurance, preneed funeral insurance is designed to set aside funds for your funeral, before the need arises. It is another type of insurance policy designed to protect your loved ones from bearing a financial burden after you die. It covers the costs of predetermined expenses such as standard funeral home services, funeral merchandise, church and burial services. In some instances, this type of policy can protect against inflation and the rising cost of funeral expenses by locking into today’s prices for services and merchandise.

It, too, can be offered as either a term life policy or type of permanent policy. However, instead of paying the benefits of your policy to your beneficiary when you die, the money goes directly to the funeral service provider of your choosing. As referenced earlier, under this program, you may select the funeral home, type of service, casket (or cremation), flowers, headstone, burial plot, the cost of digging and filling the grave, and other items, and lock in the prices for them by paying in advance.

The downsides to this is the only covered costs are those affiliated with the specific funeral home you choose. Many people prefer a burial insurance policy because it allows flexibility should something change. Also, any additional amount of benefit can used for other needs.

We believe life insurance is one of the best gifts you can give, because it isn’t for you, it is for those you love.