Life Insurance
When we consider life insurance and burial insurance, we have the benefit of knowing we are planning for something specific and have the opportunity to prepare ahead of time. It's actually a very thoughtful gift for your loved ones as your life insurance policy is buying the peace of mind that they will not have to worry about finances at a very difficult time.
The average cost of a persons funeral these days is not cheap. It is in the vicinity of $5000 for a cremation to around $7500 for a burial plot funeral. So it pays to plan ahead and have an appropriate life insurance plan in place.
There are three key types of life insurance which offer different strategies in regards to funeral expenses.Life Insurance - Preneed
This is when a person takes out an insurance policy that involves prepaying all their funeral expenses at todays prices for the guaranteed provision of preselected products and services at the time of their death.
The insured person is able to plan and take control of all the details ahead of time and ensure that things will be done the way they want them when the time comes.
If a person decides on the life insurance-burial insurance option, there are a number of issues that need to be clarified so as to avoid problems in the future either for the person concerned or their surviving family. Basically there needs to be some form of detailed guarantee in place to ensure the service delivery contract is honored by the designated service providers.Life Insurance Policy - Final Expense
This option simply requires the person to add onto their current life insurance policy with what is called a 'final life expense' policy for a specific amount (usually around $10,000) which is deemed to be used to cover their funeral costs. The main problem with this approach is that the policy is for a fixed amount but the costs of funerals over the next 10-30 years will almost certainly rise to a level where the policy will no longer cover the expense. This may require the grieving family to find additional funds from other sources to cover the shortfall.
Burial Life Insurance Policy
This is a specific insurance policy taken out to cover the expenses associated with a persons funeral. It involves the payment of monthly premiums. The beneficiaries (usually the deceased person's family) may use the death benefit for any purpose, however, the initial draw is normally to accommodate the funeral expenses of the deceased.
One potential disadvantage of this kind of insurance is that the premiums may end up totalling more than the death benefit when it is issued.
It is best to consult a reputable insurance company that will draw up an appropriate life insurance - burial insurance policy that suits your specific needs.
"If our lives would lie before us, like a straight and narrow highway, so that we could see forever long before we took the ride, then we'd never look to heaven, make a wish or climb a mountain, cause we'd always know the answer, what's on the other side" (john denver)
