Insurance is something the majority of us are all too familiar with. From car insurance to home insurance to things like boat insurance and even pet insurance, it seems there's always another thing for us to insure to better prepare for every single, worst-case scenario imaginable. One of the most critical forms of insurance is, of course,life insurance.
Surely you've heard of life insurance before. But have you heard about burial insurance too? Is there a difference between the two?
The Basics of a Burial Insurance Policy
On the most basic level, burial insurance is a policy designed to help your loved ones cover your funeral expenses once the time comes. Many don't realize that all kinds of added costs and fees come with even the simplest funeral until it's too late. Getting a burial insurance policy helps to end this problem before it begins by setting aside funding for things like a burial plot, any cemetery fees, a grave marker, flowers, and anything else that falls under the umbrella of funeral expenses.
It's important to note that burial insurance is more or less untouchable while the policyholder is still living. It is not used for medical costs, doctor's appointments, prescriptions, or anything having to do with a living, breathing person's wellbeing.
Usually, there are two kinds of burial insurance: Your standard burial insurance (described above) and pre-need insurance. This pre-need insurance is highly customizable and, as a result, a much more specific kind of burial insurance than your standard fare. This form of burial insurance is optimal for those who already have a particular funeral home or burial plot picked out. Pre-need insurance policies are established with the funeral home so you can ensure there will be no hidden fees or inflation. It makes for a slightly more expensive form of burial insurance with a much shorter payment period, but it's worth it for many people in the end.
How to Get Burial Insurance
If burial insurance is something that appeals to you, you'll be happy to hear that the process of signing up for a policy is relatively simple and hassle-free. Unlike other forms of insurance, there's no medical exam required to qualify for burial insurance. Approval typically comes after an application is filled out, a few questions about medical history are answered, and any medications you're currently taking are listed.
Once approval comes, a burial insurance policy can quickly cover the costs associated with the funeral. These costs include the ones listed in the section above and things like the hearse, the casket, and a whole slew of other funeral expenses that you might not have planned for otherwise. Some policies have even been known to pay out in less than 24 hours without a death certificate needed.
The Basics of a Life Insurance Policy
Now that you have a clear picture of what burial insurance is and how you obtain it let's get into the details of a basic life insurance policy. Simply put, life insurance is intended for your family to help cover the cost of living after the policyholder has passed. The policyholder will never actually see a dime of the life insurance money. It all goes to the benefactors — i.e., the family members named in the policy — instead. Think of it as a way for a single parent to account for a sudden loss in half of the household's income or a grandparent's way of bestowing their wealth onto their spouse or their children after they've passed away.
Life insurance money is spent on things like the mortgage, school tuition, credit card bills or other forms of debt left behind, and even simple things like groceries or utilities. Anything that the policyholder's income would have helped to cover can be paid with life insurance.
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Typically, there are a few different kinds of life insurance for a future policyholder to choose from. The first,term life insurance, is usually broken up into easily-digestible terms with 15. 20, or 30-year contracts. This makes it the ideal option for young families who are just getting started: It's affordable, for starters. It gives you an excellent place first to begin to establish a life insurance policy for yourself. The second,whole life insurance, differs from term life because it does away with the terms and covers the policyholder for the remainder of their life. A whole life insurance policy lasts for the rest of our days and can even accrue cash for use in case of emergencies. The third,universal life insurance, is the most flexible and comprehensive life insurance policy. At the highest price tag, it brings the most coverage and the most benefits.
How to Get Life Insurance
Toqualify for life insurance, most people will have to go through an extensive medical exam. This helps the insurance company establish what kind of health you're in and how much your policy will need to cover to provide for family and loved ones in your absence. Your medical exam will go as far as to analyze blood and urine samples to determine your rate and assess your medical risk so that you can be set up with the fairest, most appropriate life insurance policy imaginable.
Once you're approved, and your insurance policy is chosen from the three options, you'll start making payments and rest easy knowing your family and your loved ones will be taken care of if the worst happens. From house payments to car payments to bills to any additional living expenses, the goal of life insurance is to take care of the natural worry and fear that comes in the wake of a loss when finances are involved. Who knows? If your policy is comprehensive enough, there might even be some money left over that your family and loved ones will be able to place into savings.
The Pros and Cons of Burial Insurance and Life Insurance
If you're still confused over the difference between burial insurance and life insurance, or you're simply torn over which kind of insurance policy is going to be best for you and your family, let's weigh the pros and cons of both. That way, by looking at the best and the worst of both insurance policies, you'll be able to make a much easier decision. Let's begin with weighing the pros and cons of burial insurance and then moving onto the pros and cons of life insurance.
The Pros of Burial Insurance
Can pay benefits to your family and loved ones in less than a day after the death of the policyholder, and you might not even need a death certificate to make your claim.
Benefits range anywhere from a couple thousand to upwards of $50,000.
There's no medical exam necessary to qualify for burial insurance, just a simple medical questionnaire.
As long as you keep up with your premiums, there's never going to be a time where the burial insurance policy will expire.
Most monthly payments will range anywhere from $50 to $200, making burial insurance quite affordable.
The Cons of Burial Insurance
The benefits paid to your family can only be used for funeral expenses. If they happen to need funds for things like bills or mortgage payments or any debt left behind by the policyholder, the burial insurance can't be used for it.
If your funeral expenses exceed the maximum payout of the burial insurance, you'll have to cover them out of pocket.
The Pros of Life Insurance
Your family will not have to worry about the financial fallout of the policyholder's death because the life insurance money will provide for them in the same way an income would have.
Payouts range anywhere from $50,000 to millions of dollars.
Your family's living expenses will be taken care of in the policyholder's absence, thus relieving a lot of unnecessary stress in the final weeks or months of life.
There's always going to be a life insurance plan that fits your budget — some have cost policyholders as little as $15 or $20 per month.
The Cons of Life Insurance
Payments may take upwards of 30 days or more to arrive to the benefactors.
A death certificate is almost always required in order for death benefits to be paid out, so this could prolong the payout process even further than 30 days.
Unless you have whole life insurance or universal life insurance, your policy will eventually expire and no death benefits will be paid outside the set term limits.
A comprehensive medical exam is required and may keep you from getting the ideal life insurance you imagined.
As you can see, there's a lot of little things to consider (and even a few big things) when trying to choose between burial insurance and life insurance. It raises the question: Is it worth it to pursue both? Do people really need burial insurance AND life insurance? Let's think about this.
Do You Need Both Burial Insurance and Life Insurance?
At first glance, it might make a lot of sense to sign up for both burial insurance and life insurance. Your family won't have to use any of your life insurance money on funeral costs, and vice versa. Your family won't need to stress outside expenses that they wish they could cover with the burial insurance money. However, this might not be practical for everyone's unique situation.
If you're paying top dollar for a substantial universal life insurance policy, you probably won't need to worry about extra money set aside expressly for the funeral. Alternatively, if you're not planning on having a big funeral and you've already made plans for the day (when it comes), you also likely don't need to invest in burial insurance.
However, if you've signed up for a moderate life insurance policy and worry your payout might not be enough to cover funeral expenses, feel free to pursue a burial insurance policy in addition to your life insurance policy. Because the payouts can be used on more things and the terms aren't as specific or restrictive, it goes without saying that a good life insurance policy will go above and beyond the limits of even the best burial insurance policy. Ultimately, though, the choice is yours alone to make.
Need More Information?
If you still have questions about whether or not an insurance policy is best for you, you should consider reaching out to the experts atPolicyScout. Our expertise and knowledge of the insurance industry are unparalleled. We are positive in our ability to help further educate you on what the best insurance policies are and how you can get set up with the unique coverage that fits your needs. Regardless of if you're ready to get signed up for an insurance policy or you simply want to know more about a certain subject, PolicyScout is here to help.
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As an expert in insurance and financial planning, I can provide comprehensive insights into the concepts discussed in the article. My expertise in the field is backed by a deep understanding of various insurance types, their features, and their implications for individuals and families.
Firstly, let's delve into the concepts introduced in the article:
Burial Insurance:
Definition: Burial insurance is a policy designed to cover funeral expenses. It addresses costs associated with burials, including burial plots, cemetery fees, grave markers, flowers, and other funeral-related expenses.
Types:
- Standard Burial Insurance: Covers general funeral expenses.
- Pre-Need Insurance: Highly customizable, specific to individuals with predetermined funeral arrangements.
Application Process:
- No medical exam required.
- Approval based on a simple application, medical history questions, and current medication information.
Benefits:
- Untouchable while the policyholder is alive; strictly for funeral expenses.
- Quick payouts, sometimes within 24 hours, without a death certificate.
Life Insurance:
Definition: Life insurance is intended to financially support beneficiaries (family members) after the policyholder's death. It covers various living expenses, such as mortgage, tuition, debts, groceries, and utilities.
Types:
- Term Life Insurance: Has specific terms (15, 20, or 30 years), ideal for young families.
- Whole Life Insurance: Provides coverage for the entire life of the policyholder and may accrue cash value.
- Universal Life Insurance: A flexible and comprehensive option with higher coverage and benefits.
Application Process:
- Typically requires an extensive medical exam, including blood and urine samples.
- Policyholder chooses from various options after approval.
Benefits:
- Payouts cover a range from thousands to millions of dollars.
- Provides financial support for the family's living expenses.
- Various plans available to fit different budgets.
Pros and Cons Comparison:
Burial Insurance:
Pros:
- Quick payouts for funeral expenses.
- No medical exam required.
- Affordable monthly payments.
Cons:
- Limited to funeral-related costs.
- May not cover all funeral expenses if they exceed the maximum payout.
Life Insurance:
Pros:
- Covers a wide range of living expenses.
- Payouts range from thousands to millions.
- Various plans to fit different budgets.
Cons:
- Payments may take time to arrive.
- Death certificate usually required for payouts.
- Some policies expire outside set term limits.
Do You Need Both Burial Insurance and Life Insurance?
Considerations:
- If you have a substantial universal life insurance policy, burial insurance may not be necessary.
- If your life insurance payout is insufficient for funeral expenses, adding burial insurance might be beneficial.
- Personal circ*mstances and preferences play a significant role in deciding whether to pursue both types of insurance.
Conclusion:
The decision to have both burial insurance and life insurance depends on individual circ*mstances. A well-structured life insurance policy might cover diverse expenses, including funeral costs. However, for those with specific concerns about funeral expenses exceeding their life insurance payout, combining both types could be a viable option.
For further information or personalized advice on insurance policies, individuals can reach out to experts at PolicyScout, who offer unparalleled knowledge and assistance in navigating the insurance landscape.
