If you’re between the ages of 50 and 85, you have thought about funeral planning, or you’re in the process of it. Although the thought of planning for your death isn’t the most enjoyable of events, doing so eases the burden and stress on your family.
One problem, however, with planning includes determining what type of insurance to get. Normally, most experts will steer you toward term life insurance policies, while others will say permanent insurance, in particular, burial or funeral insurance, is the best choice.
So who is right, and which one should you go with?
Well, previously Funeral.com posted an article, “Simplify Funeral Planning with Term Life Insurance,”
which discusses the benefits of term life insurance and how it can help with funeral planning. However, because many articles out there exist that claim burial insurance is a better option than term life insurance, we decided to address the features and advantages of burial insurance, so you can decide which type of policy works best for you.
What Burial Insurance Is and What it Provides
Also known as final expense plans, burial insurance is a type of permanent insurance. According to the Burial Life Insurance website, these policies do not have a specific term, and as long as you pay your premiums on time, your policy will not expire. As with other permanent insurance options, these policies include cash value components so you can build up a tax-deferred savings. You can also withdraw these funds or borrow against the policy if there’s a need; however, keep in mind that any withdrawal or unpaid loan affects the policy’s death benefit.
Overall, there are two types of benefit levels associated with burial insurance plans. These include the following:
1. Level Benefit insurance is a policy where the full face amount of the policy remains in force once the application is approved.
2. A Graded Benefit insurance policy includes a 24-month waiting period before the full face amount of the policy is in force. If death of the insured occurs during this time, carriers will return premiums paid and add interest to the amount refunded, which averages 10 percent among most insurance carriers.
Now keep in mind, the Graded Benefit works best if you have severe health issues or impairments. As long as you’re between the ages of 40 and 80, you don’t have to answer health questions, nor will insurance companies deny you the benefit of this plan.
Overall, this is what many people like about burial insurance. Unlike term life insurance and other life insurance policies, you don’t normally have to undergo a medical exam. Because you don’t have to qualify by taking a medical exam, you can get coverage regardless of your health. So if you’re afraid of needles, or you have questionable health related conditions, burial insurance may work well for you.
You will, however, have to answer a questionnaire that includes the following information: age, gender, height, weight, smoking habits, tobacco usage, alcohol usage, occupation and income, and lifestyle, including dangerous hobbies. The process though takes little time, and most applicants get approved quickly for their policy.
Once approved, you can decide if you want to pay your premium monthly, in a single lump sum, or through a graded option. The graded payment option allows you to decide how long you wish to pay your premium.
Additionally, the younger you are, the lower the cost, which is similar to term life insurance. However, if you purchase a policy in your early 50s, the cost of your premium for burial insurance remains lower than standard term life insurance, and your costs don’t go up. So if you’re on a fixed income and have some health concerns, burial insurance may be the right choice for you.
What You Should Consider Before Deciding
As with any type of insurance, including term life insurance, you want to make sure you know both the pros and cons of burial insurance before you make the choice during the funeral planning process.
In some cases because there’s no medical exam, the cost of burial insurance can cost more than an underwritten term life policy. Additionally, applicants may be rejected if they disclose an existing health or mental health condition. Finally, policy holders are subject to a 2-year contestability and suicide clause, so if insurance companies investigate a claim during that period and find something questionable, they may not pay the claim.
Do Your Research Before Making A Choice
Overall, there are a lot of pros to getting burial life insurance; however, you also want to consider the issues. However, if you are on a fixed income and have been turned down for a term life insurance policy, burial insurance is an option to ensure your funeral planning outcomes. Whatever you decide, make sure you research the insurance company, the type of policy, and speak with honest and credible experts to know if the policy you choose is right for you.
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