If you feel that you are at a point in life where you would like to begin your end-of-life financial planning for the future, funeral insurance may seem like a sensible option. Same as life insurance but with a much lower payout value,, funeral insurance is an extremely useful tool which can be used to pay for funeral arrangements as well as credit card debt, medical bills and other personal payments due after your passing .
By availing this service, you can also ensure that you do not leave behind your loved ones burdened with the crippling weight of expenses that must be accounted for later on by them.. This article will cover all that you need to know about funeral insurance so you can get the best deal with minimal costs.
Who Should Get Funeral Insurance?
A funeral insurance plan is ideal for candidates between the age of50 to 85 years . However, know that plans are open for people as young as 30 years old. Even if you consider yourself not old enough to be approaching death anywhere in the near future or are in general good health, do not put off getting funeral insurance. This is because, the younger or healthier you start, the lower the premium you will have to pay.
Furthermore, many providers of funeral insurance plans with more advantageous terms won’t accept people over a certain age or those who have health issues.
The Cost of Funerals, Funeral Insurance Coverage and Premium Expenses
Most people planning ahead for their funerals may have to choose between a cremation or a burial. The average funeral with cremation in the US may range between $6,000 to $7,000 whereas the average funeral with burial may range between $7,000 to $12,000.
Expenses covered by a funeral insurance plan typically falls between $5,000 to $20,000 with most plans providing an average expense coverage of $10,000. These values do not change based on gender. You will choose an appropriate plan depending on how much expenses you want your insurance plan to cover .
Now that you have decided on the above concern, you will have to take the matter of the premium into consideration. The premium that you have to pay will vary based on numerous factors such as age, gender, the amount of expense you want to cover and your physical health as well. As mentioned before, younger and healthier people will pay less than those older and suffering from health issues. Hence, it is recommended that you start on a plan as soon as you are able to, especially if you are older than 50.
What Features Should You Look for in a Funeral Insurance Plan?
If you have decided that a funeral insurance is the way to go, you need to look for plans which provide you with the following benefits:
- Insurance coverage lasts for the entire lifetime of the policyholder.
- Premium expenses should not increase over time.
- Premium expenses should be affordable.
- Benefits should be adjusted for inflation so they can be used to access necessities for which the plan was purchased.
- Coverage should begin the first day after death with as little time in waiting as possible.
Unfortunately, sometimes a communication gap might develop between potential policyholders and providers, leading to the former accepting less favorable terms without realizing the existence of a waiting period for the coverage to be in effect. Hence, it is important for potential policyholders to know what they should be looking for.
Types of Funeral Insurance
Insurance companies provide different kind of funeral insurance to ensure that all type of potential policyholders can be serviced despite differences in their backgrounds:
Level Benefit Burial Insurance
The level benefit burial insurance provides complete coverage from the date of issue and allows the policyholder’s beneficiary to receive the promised amount in full with no delays or waiting period required once the policyholder passes away, be it from natural causes or an accident.
Naturally, this is the most sought after insurance plan although not all clients will qualify for this plan.Although funeral insurance providers do not require applicants to disclose full medical history, some questions related to health and age could disqualify interested clients. .
In some cases, companies may even have lax underwriting guidelines thus accepting elderly applicants with common conditions such as diabetes, COPD, Hepatitis C. However, applicants with more than one condition may be rejected and required to apply for other plans.
Graded Benefit Burial Insurance
If you are suffering from multiple conditions, you can still opt for the graded benefit burial insurance. Here, the policyholder is provided complete coverage from the date of issue no matter what the cause of death. A certain percentage of this benefit is withheld and paid out after a two or three year time period called the waiting period.
This can be illustrated by the following example. Suppose, Susan has bought a $20,000 worth of graded benefit burial insurance with a three year waiting period. Now, any of the following three scenarios may happen:
- Susan passes away in the first year. Her beneficiary will receive 25% ($5,000) of the total sum right away.
- Susan passes away in the second year. Her beneficiary will receive 50% ($10,000) of the total sum right away.
- Susan passes away in the third year. Her beneficiary will receive 75% ($15,000) of the total sum right away.
Despite whichever scenario takes place, Susan’s beneficiary can only receive the full sum after this three year waiting period is over. Thus, this would happen in the fourth year and after.
Guaranteed Issue Burial Insurance
If you are suffering from serious health conditions and having a hard time getting your insurance applications accepted, the guaranteed issue burial insurance might be your last line of defense. Here, coverage is provided to anyone despite their health conditions..
Unlike the previous two funeral insurance types, no direct payments are made upon the death of the policyholder. Instead, the beneficiary will receive a payout which equals the total of the premium expenses paid plus an additional 5%-10% after a waiting period of two to three years.
Consider the following example where 80 year old John suffering from serious declining health, has purchased a guaranteed issue burial insurance with a waiting period of three years and must pay a premium of $90. After 18 months, John passes away. Once the three year waiting period is over, John’s beneficiary will receive a sum of $1,782 ($90 x 18 payments x 1.10).
Note that if John passed away from an accident, the waiting period would not apply. His beneficiary would receive the benefit right away. Unfortunately, this type of insurance is not desirable as the premium is much higher than those of the other two due to elevated risks for the provider.
How to Ensure That You Are Getting the Best Deal Possible?
Oftentimes, funeral insurance seekers will suffer from purchasing an undesirable plan due to lack of information and unscrupulous advertising. Don’t let this happen to you! For such an important endeavor, you should ideally compare funeral insurance rates from reputable providers, instantly check whether you are eligible to apply for desired plans and calculate your quotes without pressure to purchase from persistent agents.
With Insurance for Final Expense, all of this is possible. If you want a painless and efficient search for the best plan, head over to insuranceforfinalexpense.com to begin your journey.
In our society, the topic of death is a difficult one to discuss, especially when it’s our own. However, for the sake of ourselves and our loved ones, it’s a discussion we must have. After all, the voices of our loved ones will speak for us after our passing so let yours know what your final wishes are and remember to write them down for extra measure.
With appropriate financial and emotional planning, you can ensure that all your affairs in the living world are in order and when your time comes, you can finally rest in peace.