What is Burial Insurance?

Before we can explain what Burial or final expense insurance is, it’s important to first Define what final expense or final expenses are or is.

Define, Final Expense:

In a very overly simplistic way, final expenses are those that are incurred when someone passes away. These may include purchasing of the plot, the casket,  invitations flowers the service the funeral home

There are those  who consider a little bit of a more Broad grouping of expenses to include covering the cost of expenses or debt the individual who passed away is leaving behind. For example their last set of utility bills, credit card bills, any other obligations that may have an outstanding balance.

Not to make light of the situation, but similar to how people may use different terms to mean the same thing such as an individual from Boston may say that they Park their car in the yard. Whereas somebody from New York would say they Park their car in the driveway or in the garage.  So too  with final expense insurance, some people  May refer to this bye usually one of these four names:

• Funeral Insurance
• Burial Insurance
• Cremation Insurance
• Final Expense Insurance

Is this type of insurance new?

No, the type of insurance being discussed here whether it be final expense, burial, creation, or funeral insurance, they are all a type of Life Insurance.

The only difference in this situation is the way that this tool of life insurance is being marketed. To cover a specific set of expenses  that may provide Financial Security and peace of mind to the policyholder, their loved ones and or the beneficiary.

 Although life insurance comes in many shapes and sizes, when it comes to burial insurance the amount of policy can range usually between $1,000 – $40,000.

The following three are usually the financial instruments used for burial  programs:

Whole Life Insurance

Although this option maybe  more expensive then the other two options, Whole life is guaranteed not to expire, your premium is guaranteed not to go up, and the policy amount will not be reduced.

this is the option if one can afford it, they would like to have. Because there is no chance that you as a policyholder May outlive the term of this policy. It will do you no good if the policy expires before you pass away. So that extra cost does provide more financial Security.

 In addition, a nice benefit to this type of policy depending on the nature of the specific plan, some have a rider built in that the policyholder once there’s cash value can tap into a portion of the policy before they pass away and for the purpose of search medical bills Etc.

Term Life Insurance

in some cases, term life insurance may be used as an instrument to pay for the burial insurance program. the benefit have having this type of policy is that it will undoubtedly be the most economically option cuz by the very nature of this type of insurance its price point is based on a term a specific amount of time either 5 years 10 years 20 years at which point the policyholder may choose to continue with the policy but that amazing low rate will disappear. And the new rate will be based on the policyholders current age and their health profile which me make the policy unaffordable in the future.(Just keep in mind that if you come across a advertisement in the mail, on TV or on the radio if the price seems really really good. Then there’s a good chance that what you are seeing is a burial insurance that is backed by term life. If that is the case,  it would be in your best interest before signing on the dotted line to confirm two things:

1. Is this policy going to expire when I turn 75 or  80?
2.  Will the premium go up on a regular basis? or is the payment guaranteed never to go up.

Now don’t get me wrong, there is a time and a place for it term life insurance. It is very helpful to pay for such things as mortgage expenses College expenses those have a specific time frame involved. Where a term would be very appropriate to apply the coverage needed

 Single pay plan/Pre- Paid

This vehicle is usually referred to as a prepaid funeral plan. where the individual either  makes regular payments towards a predetermined balance or they make a lump-sum payment today to cover their burial needs in the future.

 The advantage of going with such a plan, usually these plans are tied or connected to a funeral home and or a cemetery so they promote the idea that you have an opportunity to pre-plan all of your wishes.  the biggest advantage and benefit to this type of burial  plan oh, is that the loved one or the beneficiary does not need to take care of the details regarding the type of funeral where it’s going to take place and manage the negotiation of costs.

 the downside of this type of plan is that you are limited to one Funeral Home or a network of funeral homes which can be very limiting. Especially if the family that will be making the arrangements lives far away. what if the financial stability of these homes changes? is the value that you’re getting going to match what you paid them? At select burial insurance we usually suggest that the family negotiates the terms with the choice Funeral Home without letting them know how much the insurance is for. And that’s just a practical business negotiation premis.  If the home knows that you have $35,000 to spend they would gladly help you come up with a funeral to make you sad of all of those dollars. 

just to be clear, I don’t think there’s anything wrong with the Prepaid Plan, I just prefer that individuals have more flexibility, choice which at the end of the day is in the best interest of the family and the beneficiary as well as the policyholder.