Funeral bills will start around $6,000 and rise from there (and this is just a basic funeral). While your family will want to give you the best they can, they will be helped enormously with financial costs when you have a funeral insurance policy in hand. Unfortunately, you may not be able to rely on life insurance to pay your financial bills at the time of the funeral. Since most funerals are paid for at the time of death, or shortly thereafter, there has not been enough time for a life insurance policy to pay out (this can take months to years if there is a problem).
Coverage Under Funeral Insurance
Funeral insurance provides your family with a payout at the time that you die. The payout is strictly used to pay for funeral costs, including burial costs. There are a number of different plans available to choose from, but most plans will accept anyone between the ages of 15 to 80 into them. There are no health or blood checks done on you. In addition to this, the overall costs are low, sometimes a few dollars a week. The amount paid out can range widely, but most plans pay about $15,000.
The general funeral insurance plan can have various components to it as well. For example, some plans offer discounts if more than one household or family member is on it. Single and family plans are available, with some family plans offering discounts of up to 10 percent for the second individual.
In some funeral insurance plans, accidental death, such as when you are involved in a car accident, can result in more of a payout, up to double the costs of a standard payout.
Questions for Your Provider
When talking to your provider for funeral insurance, there are a number of questions to ask them.
• How do premiums change over time? Stepped up premiums are common. These start at a lower level and as you age will increase. Level premiums start at a higher level but do not change over time.
• When are premiums paid? Some funeral insurance companies allow you to choose how often you pay for your insurance. This is often every month or on a fortnightly routine.
• What about inflation? Some funeral insurance policies will provide you with coverage that will grow with inflation. Be sure that your plan provides this type of protection.
• Be sure you fully understand the funeral insurance plan prior to getting in on it.
Ways to Save on Funeral Insurance
To save money on funeral insurance, there are a few things to do. First, get quotes from several insurance companies to compare what they are offering (especially the amount of cover and limitations). You will find a large range in pricing for premiums across the board. In addition, many companies have higher or lower cover amounts, which will affect your price as well.
Also, consider an accidental death period. Some policies provide a 12 month or 24 month accidental death period in which there is no payout for those first months of service. Yet, you should be able to get back the premiums you have paid in. This will give you a lower premium cost during those years and beyond.
Don’t forget about inflation. Some policies will not change over time, which means that $15,000 today may still be just $15,000 in ten, twenty or more years (even though funeral expenses have doubled). Ask about a money back guarantee for a limited time if you change your mind.
Beware Before Signing
Prior to signing the contract for a funeral insurance plan, do your homework. Know the average cost of the type of funeral you would like and be sure enough cover is provided. Also, find out what limitations, if any, are placed on how the funds from the policy are spent.
Additional Coverage to Consider
While funeral insurance provides your family with a way of handling the costs of your funeral directly, it is not a life insurance policy. If your family is dependent on your income at this time, then you should have a quality life insurance plan in place which will help them pay their mortgage or other debts without worry.
