Funeral expenditure is usually high throughout most of the United States. An average cremation can cost over a thousand dollars, and traditional burials can go beyond ten thousand dollars. If you haven’t done any pre-planning, such as a funeral insurance policy, then these expenditures can create even more trauma with its long-listed bills.
Many of us do not even understand the ideas of funeral insurance and feel conflicted about getting such a plan. Funeral insurance or burial insurance is a final expense insurance policy where you purchase an insurance policy solely for funerals, as the name suggests.
Funeral insurance does not need you to provide any medical reports in order to buy it. Anyone can buy it, and the company will pay the full amount of the policy on your death benefits to cover your funeral costs. The death benefits may range from 5000 dollars to 25000 dollars, depending on your policy.
However, not all insurance companies have the same benefits in their funeral insurance policies. Companies like Colonial Penn waits for two long years to complete all its premiums in order to receive the full coverage of your death benefits. To know more about secret loopholes of such insurance policies, read this article.
How do I find a funeral insurance policy that fits all of my needs? To solve that puzzle, let’s follow the following steps to make sure you get the best policy.
1. Final Expense Estimation
First and foremost, you need to estimate a figure that is sufficient enough to cover all final expenses. Of course, a funeral bill is the largest single cost on the list, but there are more expenses to follow, such as any remaining credit card bills, medical bills, mortgages, and more.
You can visit some of the funeral houses and insurance companies to find a rough estimation for your final expense needs. If you already know the breakdown of the funeral items you need, then it would be easier to estimate your funeral costs.
Funeral items such as caskets can cost you 2000 dollars to above 10000 dollars each. You also need to consider other funeral items like headstones (at least 1000 dollars), plot/niche (1000 to 4000 dollars), burial vault (minimum of 500 dollars), viewing times (up to 1000 dollars), and the ceremony itself (nearly 1000 dollars).
2. Know Whether You Have Enough Money to Cover Final Expenses
Once you have estimated your final expense costs, it’s time to determine whether you can cover the insurance for it or not. To figure it out, ask for assistance through financial advisors, and they may redesign your estimated costs according to your estate.
Does your death benefit tie-up in probates? How easily can survivors access your fund? Remember all funeral houses and cemeteries expect payment before the funeral procedure starts.
3. Decide on Your Need of Funeral Insurance
Funeral insurance is important if you do not have enough money to cover your funeral expenses without it. Even if you have enough money to leave for your family, your final expense call surely depletes your estate to some extent, and funeral insurance helps protect your assets for your survivors. There are more reasons to buy funeral insurance, such as:
1. Premium levels do not increase with your age.
2. Your beneficiaries will get all your premiums of the policy with some interest compounded annually.
3. No medical exams are required to buy such a policy.
4. It’s a hassle-free process without probates.
5. Ideally, it’s a whole life policy that stays active until you die.
4. Select the Type of Insurance You Want
Funeral expenses are specifically designed to pay your final expense coverages. You will find different specialized policies to cover your needs for your final expenses. Insurance companies offer two basic policies in funeral insurance.
1. Simplified Issue
In the simplified issue, the insurance company will underwrite your previous medical history. Though in funeral insurance, medical examinations are never required, under this policy, they can decline you if you have some pre-existing conditions like if you smoke tobacco, if you consume alcohol frequently, and any other risk factors.
This type of policy often integrates level benefits policy. Here, your beneficiaries will get the full benefits regardless of if your death is natural or accidental. In level benefits, the total amount of the policy never increases with time, and the level death benefits can get diminished with inflation over time.
2. Guaranteed Issue
In this policy, you don’t need to answer any health questions. Because insurance companies assume more risk on you, they will charge more for this kind of policy.
This policy often involves modified benefit provisions. It’s a plan where you won’t get the full death benefit unless you complete all its premiums for a specified time frame. This time limit is also known as a restriction period, and it is mostly within 24 to 36 months.
If you die before the restriction period, then your beneficiaries will get only a limited portion of death benefits. It is only applicable for natural deaths, but in the case of an accidental death, you will get full benefits even if you haven’t completed your restriction period.
5. Market Research
To find the best suitable deal for funeral expenses, it’s time for some market research. Compare the policies and offerings from different insurance companies. Make sure you go through their terms and conditions in order to judge things clearly.
Also, not all states have the same regulations for funeral insurance. For better research, get advice from experts, friends, or families to help find you the best policy. Check online websites and add to social media communities for further information.
Another important aspect of market research is the premium distribution. Find an insurance company where you can break down your monthly premiums into the most affordable rates. If you can, consult with financial experts to help decide your premium plans.
6. Select Funeral Insurance Provider
You can purchase a funeral insurance policy from agents or directly from insurance companies. Make sure that your provider has a license from the proper authorities and take a look at their portfolio. Read some reviews on their services as will.
It is now time to sign some papers and secure your family from exorbitant final expenses. Also, let your family members or dear ones know about your final expense policy. Nominate your beneficiaries and take all the necessary documents from your provider.
Funeral expenses are costly for most middle-income families. If you plan it well and buy funeral insurance, then you can cut off these excessive expenditures successfully. You don’t want to put your family in more trouble after your death. Face the reality and pick a policy for your family.