Everyone dies. But not everyone receives the same level of treatment in death.
The median cost of a funeral in 2019 totaled 7,640 dollars. That is several months of rent in most American cities. Many families can’t afford a funeral, so their loved ones go without memorialization.
Yet you don’t have to. When you are future planning, you should consider purchasing a burial insurance package.
What does a package cover? How does it compare to arrangements like whole life insurance?
Answer these questions and you can make the best future plans. Here is your quick guide.
The Basics of Burial Insurance
As the name suggests, burial insurance covers the cost of burial. But most packages cover more than that.
They provide resources for a funeral. They can cover the costs of a hearse, chaplain, and embalming of the body. If a person chooses to be cremated, their package covers the cremation fee and an urn to store their ashes.
An insurance package can provide for a tombstone or vault. For someone who wants their ashes sprinkled, a package can cover some other physical memorial.
Anyone can buy a package. Most companies focus their marketing on older people, but young people can get coverage as well.
Burial insurance packages function like any other kind of insurance. A subscriber pays monthly premiums to receive coverage. After they pass away, money goes to their beneficiaries.
Burial insurance does not provide end-of-life healthcare services. You need to buy a separate program in order to get hospice care.
Types of Coverage
There are a couple of different kinds of funeral insurance. Simplified issue life insurance requires an application. It asks questions about a person’s current health, including if they have diseases like HIV/AIDS.
A “yes” answer can lead to disqualification. Guaranteed issue life insurance has no application so no one can get turned down.
But guaranteed issue packages often have graded death benefits. If a person dies within a couple of years of buying their policy, their beneficiaries receive less money. Accidental deaths are exempt from this.
Both simplified and guaranteed issue packages pay to beneficiaries. A pre-need plan pays out money to a funeral home. The subscriber needs to pick out their own funeral arrangements, then buy a package that covers their choices.
But an individual will lose coverage if they move to another state. They must find a portable plan if they intend to move.
You may have heard of “funeral insurance” or “final expense insurance.” Organizations like the Spectrum Insurance Group use these terms to refer to burial insurance. They do not refer to separate types of coverage.
Other Ways to Pay for a Funeral
Before you purchase burial insurance, you should examine other options to cover your funeral. Your life insurance package may provide benefits.
Term life insurance covers a certain period of time, while whole life insurance lasts an entire lifetime. If you pass away while you are insured, your plan can cover your funeral. But you need to look at your coverage policy before assuming it covers your funeral.
Social Security provides a small lump sum for surviving spouses. This sum amounts to 255 dollars, which is not enough to cover all funeral costs.
If you have enough money, you can establish a funeral trust. You can set money aside in a bank account and name a trustee. They then withdraw from the account to pay for burial and funeral arrangements.
You can do something similar with your life insurance. You write a document with instructions that are addressed to a trustee. The trustee receives the money from your insurance and acts according to your instructions.
The federal government covers the burials of veterans. Some states cover for deaths as a result of crime or a natural disaster. Do some research if you think you might qualify for this.
Planning for the Future
You should buy insurance as soon as possible. The longer you wait, the higher the chance you will have of getting sick or hurt.
Buying insurance gives you the peace of mind you need to make life plans. You will know that you can receive health services and funeral arrangements.
Consider the options you have carefully, including burial insurance. When you buy a package, read the terms over with a lawyer. Make sure you know what is included and what is not.
Write a will and last testament that breaks down your estate. In your documents, you should include information on your funeral arrangements. Specify what you want others to do with your body and if you want to be buried.
Include information on your burial insurance package. Give a description of what is covered and what other expenses need to be paid.
Draft your will with a financial advisor and a lawyer. Tell your trustees that you are naming them in your will.
If you ever want to make changes to your arrangements, make them right away. Do not assume that your family will guess your intentions. Put it into writing in order to keep yourself secure.
Start Future Planning
Burial insurance covers the costs of burial and funeral arrangements. It gives money to your beneficiaries who can act according to your wishes.
You can purchase a simplified or guaranteed issue package, depending on your current health condition. Your life insurance package may cover your funeral expenses, but you need to read the terms of it.
Buy insurance as soon as possible. Draft a will in which you specify how you want to be memorialized.
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