When someone close to you dies, the last thing you want to think about is money. Unfortunately, with the cost of funerals and burial expenses soaring, it’s something you need to consider. Burial insurance can help cover the costs associated with a funeral and burial, so your loved ones don’t have to worry about that added burden during a difficult time. Here’s everything you need to know about burial insurance.
Types of burial insurance
There are two main types of burial insurance: simplified issue policies and guaranteed issue life insurance.
Simplified issue policies are designed to offer coverage with fewer underwriting requirements. In most cases, applicants for these policies only need to answer a few questions about their health and lifestyle in order to qualify. This can make it easier and faster to get coverage, which is especially important if you are looking for a policy to cover final expenses.
Note, however, that your answers to some questions can disqualify you. If you’re using a wheelchair, residing in a nursing home, or suffering from a health condition like cancer or heart disease, coverage might get denied.
Guaranteed issue life insurance policies, on the other hand, do not require the insured to answer any medical questions and are available to people with health conditions that might make them ineligible for other types of life insurance. But since the insurer doesn’t know anything about your health history, expect premiums to be higher because of the added risk.
Both types of policies have their advantages and disadvantages, so it is important to consult with a financial advisor to determine which type of policy is right for you.
Benefits of burial insurance
While most life insurance policies only pay out after your death, burial insurance pays out as soon as the policy is finalized. This can be helpful if you are worried about your family being unable to afford your funeral. Burial insurance can also be used to help pay for other final expenses, such as medical bills or outstanding debts. In some cases, the death benefit from a burial insurance policy can be used to help pay for estate taxes. Ultimately, burial insurance is worth considering if you want to make sure your loved ones are taken care of financially after you die.
It’s important to read the fine print when purchasing burial insurance, as many policies have a two-year waiting period. If you die of natural causes in the first two years after you take out the policy, your beneficiaries will not receive the full payout. While this may seem like a minor detail, it’s important to be aware of it before you purchase a policy. Otherwise, your loved ones may not have the financial resources they need to cover your final expenses.
How much coverage do you need?
To calculate the amount of coverage you need, you need to consider the following factors:
-The cost of a funeral: This includes the cost of a casket, cremation, tombstone, funeral home services, and more.
-Outstanding debts: This includes any outstanding medical bills, credit card debts, or personal loans.
-Final expenses: This includes the cost of a burial plot or cremation, as well as any other final expenses.
Once you have considered all of these factors, you can then decide how much burial insurance you need. The median cost of a funeral and burial is about $7,600. Typically, most policies range from $5,000 to $25,000 in coverage. However, some people may need more or less depending on their individual circumstances.
It’s also important to keep in mind that burial insurance is not the same as life insurance. Life insurance is designed to provide financial security for your loved ones in the event of your death, while burial insurance is specifically for covering the costs of your funeral and final expenses. As such, you may need both types of coverage to make sure your loved ones are taken care of financially.