What is burial insurance and final expense insurance?
Burial insurance, or final expense insurance, is a type of whole life insurance, otherwise known as permanent insurance.
These types of policies are often purchased by senior citizens between the ages of 50-85 years old that do not require a large amount of life insurance coverage. The amount of coverage that can be purchased typically ranges from $2,000 to $50,000.
The main purpose of burial and final expense life insurance coverage is to help provide your family with the funds to pay for either funeral costs, final debts, or both.
The Differences Between Burial Insurance and Standard Life Insurance
Let’s make sure you’re clear on some of the main differences between life insurance and final expense insurance.
While, as we mentioned above, burial insurance is a type of life insurance, they don’t work in exactly the same way.
Unlike with a traditional life insurance policy, you’ll face some fairly strict rules about the way the death benefit associated with final expense insurance can be spent.
Additionally, unlike certain term life insurance plans, your final expense insurance won’t expire (there are rare companies that offer term-based burial insurance.) This means that the policy won’t pay out until you’ve passed away.
Be aware that some burial insurance companies may have stricter rules than others about you canceling your burial insurance policy or borrowing off of any cash value associated with the account.
This is why, especially if you don’t feel comfortable negotiating on your own behalf, you should consider working with an insurance professional who can help you to be certain you’ve chosen the right policy for your needs.
Is there a difference between burial insurance and final expense insurance?
The quick and simple answer is no.
There really is no difference other than the actual name.
This type of life insurance coverage is sometimes called burial insurance, final expense insurance, or even pre-need funeral insurance. All of these names are commonly used terms to describe what is really a whole life insurance policy for seniors.
Although burial and final expense insurance are the same types of life insurance coverage, experts agree that there is a slight difference in how the death benefit is intended to be used.
Burial Insurance is purchased to ensure that the funds required to pay for all funeral, burial, or cremation services are available to friends and family members the deceased has left behind.
Some funeral homes will even allow you to pre-pay for funeral expenses by assigning your life insurance policy to them. This allows for the death benefit funds to go directly to the funeral home to pay for the planned funeral and costs.
The funeral home will then either place this money in a trust fund that won’t pay out until you’ve passed away, or it will use the money to buy an insurance policy, declaring itself as your beneficiary.
If you pre-pay for your funeral, you’ll also be able to select the funeral home you’d like to work with your family. You can pay for your funeral in installments, or in an entire lump sum.