What Is The Difference Between Burial Insurance And Life Insurance?
When considering insurance policies to protect your beneficiaries, it’s important to understand the different types of insurance and what your purchase options are. Life insurance is a long-term financial security measure with various options, including term life, whole life, and variable insurance. These policies are intended to replace someone’s income when they pass away.
Burial insurance, also known as final expense or funeral insurance, is a specific type of life insurance meant to cover a person’s funeral costs when they pass. Unlike traditional life insurance policies, burial insurance offers a smaller benefit amount because it focuses on covering short-term expenses. The following table compares the key elements of life insurance, burial insurance, and funeral insurance:
|Life Insurance||Burial Insurance and Funeral Insurance|
|Type of Insurance||Term, whole, variable, annuity, etc.||A specific type of life insurance|
|Payment Structure||Lump sum or monthly amounts||Lump sum almost immediately upon death|
|Coverage Amount||Policies can be in the millions of dollars||Policies usually don’t exceed $50,000|
|Medical Exam||Often required||Often not required|
|Expiration of Insurance||May expire before you die||Remains in effect until you die as long as premiums are paid|
|Cash Value||May or may not accumulate cash value||Usually accumulates cash value|
It’s important to note that burial insurance is not a retirement plan, investment, or meant to cover large expenses like purchasing a home or paying for college. Its primary use is to cover funeral costs, but the beneficiary can use it for any end-of-life expenses like unpaid medical bills, outstanding credit card debt, or various bills accrued in the month of the passing.
Funerals can cost thousands of dollars, which can be a burden on loved ones who are responsible for covering the costs. By including a burial insurance policy in your estate planning, you can ease the process of paying for a funeral. At Lincoln Heritage Life Insurance Company, we offer burial insurance policies that are quick and easy to qualify for because coverage is issued based on answers to health questions on the application. Our policies don’t require a medical exam or physical, and they provide your family with the cash insurance benefit within 24 hours of claim approval.