Differences Between Life Insurance And Burial Insurance

couple thinking about burial insurance and life insurance

Burial Insurance  And Life Insurance:How  Do They Differ From Each Other?

Virtually everyone is familiar with insurance policies. You’ve probably seen many television advertisements concerning the subject. Perhaps, you have heard your parents and grandparents  discussing the details of having an insurance policy to cover funeral expenses. Determining the differences between burial and life insurance can help you make the best decision about which one to choose.

Life Insurance Is For Your Family’s Living Expenses 

Life insurance and Burial Insurance may seem the same at first, but they are distinctly different from each other. To qualify for life insurance, you may have to take a medical exam, and your blood and urine analysis results will determine what rate you qualify for. Once you are approved, you agree to pay a preset amount of money periodically to the insurance company.

After your death, the life insurance policy will help  your beneficiary(s)   cover all your family’s living expenses. These may include: Mortgage, college tuition, food, bills, credit card, and other essential necessities. Depending on the amount of the life insurance policy, some beneficiaries may have extra money left over for other personal expenses.

Burial  Insurance Is For Your Funeral Expenses 

On the other hand, a burial insurance policy  does not require a medical exam. To get an approval , you just need to answer a few medical questions on application, and your medication history. Once you qualify, most insurance companies can issue your policy in just a few days.Once in force, a burial insurance policy can pay  your funeral expenses quickly  like: Burial plot, cemetery fees,grave marker, casket, cremation, embalming, flowers, hearse, and other  final expenses. In fact, some Burial Insurance policies have the ability to pay benefits in as fast as 24 hours without a  death certificate.* This is the main reason why most funeral homes accept it as direct payment without additional requirements. This can be a great advantage when covering your death-related expenses.

Piggy Bank for funeral

 What Are The Major Types Of Life Insurance ?

There are two major types of life insurance that are available for you to choose from. They consist of permanent and temporary life insurance policies. Within those two categories the most common insurance policies are: Term life, whole life, and universal.

  • Term life insurance provides temporary protection for anyone at an affordable budget. It usually offers 15,20,and 30 year contracts, and it can be a great way to protect a young growing  family.  However, your term life insurance policy  may expire before you die. In fact, 90% of term life insurance plans never a pay a death benefit because of the term limits. 
  • Whole life insurance, on the other hand, will provide you with coverage for the remainder of your life. Pay the premiums in a timely manner and you won’t risk losing the insurance policy. It also accumulates cash value for any emergencies or to pay past due payments.
  • Universal life insurance offers more flexibility than whole life and term life combined. As your Life Insurance needs change, you’re able to conveniently change the amount of insurance you’ll need, and modify your payments, This is why most agents refer to it as a flexible premium adjustable life insurance policy.  It provides permanent coverage with the most benefits.                                                                                          

Life Insurance Vs. Burial Insurance Summary

Mainly Term Life and permanent life insuranceA Whole Life insurance with guaranteed premiums and guaranteed death benefit
It may take 30 days or longer to pay benefits after death certificate is receivedIt can pay benefits in as fast as 24 hours without a death certificate
Ranges from $50,000 to MillionsRanges from $2,000 to $50,000
Requires medical exam depending on amount of insuranceNo medical exam required. Only medical questions and medication history
It usually expires in 10, 20 or 30 years, unless you bought permanent life insurance.It never expires as long as you pay the premiums on time
It is for your family’s future living expenses after you dieIt is for your immediate funeral and burial expenses when you pass away

* In order for  burial insurance policy to pay benefits in 24 hours, your policy must be in force for at least 2 years. Also, your premium payments must be current, and you must not  have any outstanding loans against your policy. 

Main Types Of Burial Insurance Plans

To clarify, Burial Insurance may also be called funeral insurance, preneed insurance, senior life insurance, or final expense insurance. They are all basically part of a Whole Life Insurance foundation. To make it simple, we will focus on two types: Burial Insurance and Preneed Insurance.

Burial Insurance is an individual final expense policy which can be used in any funeral home anywhere in the country. In fact, most seniors prefer this type of policy since it is very affordable and easy to qualify for.The beneficiary has total control of the cash benefit, and it’s up to your next of kin to decide what your final wishes will be, and how the insurance payout will be spent. However, a common  risk with burial insurance is the probability that you will pay more in premiums than what the policy is worth. Additionally, the insurance policy amount may not be enough by the time you pass away. Therefore, make sure you buy at least 30% more coverage than what you would need today.

Preneed Insurance is a more specific  funeral insurance plan with a high degree of customization. It is especially ideal for those folks who have a particular funeral home in mind, and they  are certain they will reside in the same  local area until their final day. With this insurance contract, the funeral home is the assignee beforehand, and the insured picks funeral service details like: Type of casket, flowers, religious service, graveside service, vault, etc. Once agreement is signed, the preneed insurance company promises to pay fully all the services and merchandise in the contract, no matter when the insured passes away. Additionally, the funeral home will guarantee inflation protection on main services and merchandise like: Funeral home fees, vault,and casket. However, these plans must be paid in full in usually 3, 5, 7 or 10 years. This makes the monthly payment a lot higher than a typical burial insurance policy.

Burial Insurance Vs. Preneed Insurance Summary

BURIAL INSURANCE0-85$2500-$50,000LIFETIME$48-$98NO
PRENEED INSURANCE0-90$1,500 – $20,0003,5,7,10,20$88-$198YES

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Before making a final decision on any sort of insurance, research it first. Not all companies provide you with the same type of life insurance or burial insurance policies. If you’re only looking to cover the basic costs of your loved one or self, then consider choosing burial insurance. However, if you’d like them to have extra money to cover expenses outside of the funeral arrangements, select the life insurance policy that works best for them.  Familiarize yourself with each detail to verify that this is the correct insurance policy for you and your beneficiaries. Not understanding all of the details ahead of time could cost your surviving loved ones much aggravation and more grief. Being fully prepared will make the entire process of planning your funeral much easier to deal with. Ultimately, you may want to consider purchasing both types of policies to provide the ideal protection to your family.

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