The pricing and structure of burial insurance work differently from standard term life policies. While it is somewhat similar to whole life policies, the coverage period is much smaller, and so is the coverage amount. Insurance companies offer specific plans for seniors who are over 60 years old.
In whole life policies, the claim is paid out either on the policy’s maturity or on the insured’s death, whichever is sooner. However, there is no concept of “maturity” when it comes to funeral insurance. The payout happens on the death of the insured. The family members use the money to cover the funeral costs and other death-related expenses.
Insurance expert Gray P. Cubeta from Insurance for Final Expenses suggests that it may be advisable to go through a few burial insurance quotes before choosing a plan.
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How Burial Insurance Works
Reports show that only 60% of Americans have life insurance coverage. Not having life insurance is a severe disadvantage to the family of the deceased. It’s recommended that seniors with and without life insurance coverage get burial insurance instead.
Funerals can be expensive in America. The average cost could be anywhere between $8000 and $10000. If the death is unexpected, funeral costs could add a heavy financial strain to the deceased person’s family.
It has been observed that funeral homes charge around $2500 for the funeral services. Besides funeral charges, there are costs related to death certificates, legal fees, the cemetery, etc. All these costs are taken into account when formulating quotes for funeral insurance. Standard burial insurance policies offer a coverage band between $10000 and $25000. You could even extend the coverage to $500000 if you choose a high coverage plan and want to be extra cautious.
Generally, your cost per year will range between $210 and $300 for a $5000 burial insurance plan. Plans that offer higher coverage will cost more per year. Insurance experts recommend choosing a policy that offers around $10000 coverage to ensure all final expenses, including legal costs, are covered.
Seniors who are 60 or above will generally have to pay $400 per year for final insurance, and seniors over 70 years may be expected to pay close to $600. So it’s maybe a good idea to get final expense insurance at the earliest. The insurance company will also consider the health condition of the applicant. It’s easy to qualify for funeral insurance, and no medical tests are involved.
However, the company may assess the applicant’s age and health condition to determine the cost to be charged. If the applicant is older and has terminal conditions that may lead to death in two years or less, the company may charge a higher premium.
Applicants will have the option of choosing between annual, half-yearly, quarterly, or monthly plans. Companies also give applicants the freedom to structure their policies to include specific costs. You could even arrange for the policy amount to be paid directly to the funeral house or hospice. Insurance experts say that burial insurance quotes vary based on the type, structure, and terms of the policy.
Benefits of Burial Insurance
By choosing final expense insurance, you ensure that your family does not have to worry about funeral costs or other final costs. Timely premium payments will guarantee the death benefits. Some policies are even eligible for accelerated benefits, which will allow you to tap into the policy for your medical expenses and bills. If you use the accelerated benefits option, the insurance company will only pay the remaining amount to your beneficiaries at the time of payout.
Most insurance companies pay the coverage amount to the insurance beneficiaries. Your family will have the option of using the money for any purpose they choose. They may choose to use the claim amount to pay off debts or other expenses.
Since burial insurance plans cover death-related expenses, insurance companies don’t disqualify people with terminal medical issues.
However, if you have a terminal medical condition, it would be best to report the same to the insurance company. Hiding important health details could have legal implications at the time of death. Suppose the company can prove that the policy the applicant didn’t submit an open application. In that case, the policy may be considered void, and the beneficiaries may not be eligible for any payout.
Burial Insurance Will Give Your Loved Ones the Necessary Support
Burial insurance may seem expensive. However, funerals are expensive, and investing in a final expense insurance policy will help ensure your family does not face the pain of worrying about organizing funds for your funeral. Burial insurance is recommended even if you have whole life insurance.
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