Do you want to take out a life policy to cover the cost of your funeral? There are at least 4 names which are used to describe this type of policy. While the names burial insurance, pre need insurance, seniors life insurance and final expense life insurance all refer to much the same thing, insurers make hair splitting distinctions between them as though that makes them all different in kind..
The simplest way to think about insurance to cover funeral expense is to know that policies called burial insurance, pre need insurance, seniors life policies and final expense life policies ARE all the same. They are all in one way or another designed to help the policy owner cover his or her funeral or burial expenses. Yes they do differ, but only at the margins.
Possible differences between these policies
The first distinction to bear in mind with all the different types of burial insurance is they can be term policies or whole life policies. If they are term policies they will be for a specific term, say up to the age of 80 at which point the policy is paid out. Whole life policies will cover your whole life and the death benefit will be paid to a designated beneficiary who then has the responsibility of paying all your burial expenses.
The second distinction between all forms of burial insurance relates to who gets to issue these types of policies. Only a licensed insurance agent can sell an insurance policy. But it is quite common practice for a Funeral Director to also be a licensed insurance agent and the policies they sell are normally called burial or pre-needs life polices. On the other hand Seniors Life and final expense life policies almost always refer to individual, small whole life insurance policies purchased from general insurance agents to cover funeral expenses.
The third distinction between burial insurances policies is who receives the payout from such a policy. If it has been issued by a general insurance agent then you will have a designated beneficiary who is charged with the responsibility of carrying out your wishes regarding your funeral. If however burial insurance has been issued by a Funeral Director who is also a licensed insurance agent then that Funeral Director will be the beneficiary of the policy and it goes to him or her to cover your funeral expenses.
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Who can buy and what type of benefit do you get?
All burial, pre-need, seniors life or final expense life policies are normally policies you can buy either without any medical examination or with you only answering some basic health questions. Some of these policies are called ‘guaranteed issue’ or ‘easy issue insurance’.
Polices which are designed to meet burial expenses can pay a full benefit or what is called a graded benefit. A full benefit is easy to understand, the policy pays out in full when you die. A graded benefit would be specified in those cases where a policy owner has a severe medical condition at the time they purchase the policy. If they die in the first few years of the policy a smaller benefit is paid, however if they die after that specified time their heirs will receive a full death benefit. Make sure you get a quote from a reputable insurance company before buying any policies of this kind.
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