This is a sponsored guest post.
We understand this may not be the most pleasant topic to think about, but it is an important one. The average cost of a funeral and final expenses is now ranging anywhere from $10,000 to possibly $20,000 depending on a person’s final wishes. However, most people don’t want to be a burden to their loved ones, on coming up with a strategy to pay for all of these burial costs.
Burial Insurance: The Basics
A burial insurance policy, or a final expense insurance policy, is a term given to ‘smaller’ amounts of whole life insurance. Since these policies are generally for small amounts of life insurance, many consumers earmark these policies to take care of all the final expenses that come at the end of one’s life. Sample expense are burial costs, transportation expenses, funeral expenses, or possibly even medical bills.
At the time of death, the beneficiary of the policy will receive a lump sum, tax-free payment from the insurance company. The family can then use the money however it’s needed. There are no restrictions on how families can use these policies.
Burial insurance policies also pay out the death claims in a much quicker manner, compared to traditional life insurance policies. Due to insurance carriers knowing that the families need this benefit as quickly as possible, many companies will pay the death claim out in 48 to 72 hours.
What are the Costs of a Burial Insurance Policy?
The premium for these types of policies are determined by a person’s age at the time of application and their overall health. If a person takes out a policy in their 40’s, the rates are dramatically less than a person who stars a plan in their 70’s.
Good news for people who may not be in the best of health. Most final expense insurance carriers have fairly lenient underwriting, compared to traditional life insurance companies. Ex. You could have a history of cancer, heart attacks, strokes, and still qualify for coverage. Even people with Diabetes can obtain affordable burial insurance policies.
Here are some factors that determine the premiums:
Smoker / nonsmoker?
Your height and weight
Recent Medical Issues?
Most companies will also check your medical history through prescription history databases and the Medical Information Bureau or MIB report. Sometimes, they may even contact your doctor to request information and answer questions. Insurance companies can do all this without the need for a medical exam.
Do I Need Burial Insurance?
Everyone’s financial objectives and situations are different. Maybe you already have a life insurance policy. If so, we’d recommend reviewing the policy, and to make sure it’s not a policy that you could outlive such as a term life insurance policy. It’s possible that you may already have a policy that could address all of these final expenses.
Maybe you have significant assets that could be used by your family to pay for the various final expenses. If this is the case, you would want to make sure the assets are readily available to the family and are liquid. Most funeral homes want to be paid in a timely manner, and won’t wait weeks or months to be compensated for their services.
Perhaps you’re a person who may not feel comfortable living money in a checking/savings account, out of fear you may ‘dip’ into these accounts. In this case, it may be smart to take out a policy that could be guaranteed to pay out to your loved ones. Some companies will allow you to pay up a policy, with a one time, single premium payment.
Addressing these types of concerns is always an important matter. Leaving a ‘blue-print’ of your final wishes to your family will make their lives easier, at a time when they are grieving. No matter how you plan on addressing these final expenses, it’s important to document it, and let family members know of your wishes. These end of life decisions may be a little uncomfortable today, but it will make a world of difference to your loved ones when the time comes.