What Is The Difference Between Life And Burial Insurance?
Most of us realize the importance of life insurance to help our loved ones continue covering their regular expenses in the event of our passing. The purpose is to ensure that there’s enough money to settle outstanding debts and continue to provide for your family’s needs. Life insurance is considered a long-term financial security measure and there is a wide spectrum of different options, depending on your needs.
When you’re in the market for insurance policies to protect your beneficiaries, you need to make sure you understand what you’re shopping for and what your purchase options are. Popular types of life insurance include term life, whole life, and variable insurance. These types of policies are meant to replace someone’s income when they pass away.
Various Options for Life Insurance
For example, there’s a type of whole life insurance known as burial insurance that also goes by the names “final expense insurance” and “funeral insurance” depending on the insurer. But don’t be fooled: There’s no difference between these – regardless of the name.
It’s one very specific type of “bread” used for a very specific purpose: to cover funeral costs. Burial insurance is a tool you can use to help your loved ones pay for your final expenses. It is considered a type of life insurance policy, but it offers a smaller benefit amount than traditional term life insurance because its focus is smaller. As with all insurance, the cost is based on your age and health when you start.
Comparing the Coverages: Life Insurance vs Burial Insurance
To make your decision as easy as possible, the following table offers a direct comparison of key elements in life insurance, burial insurance, and funeral insurance:
|Life Insurance||Burial Insurance and Funeral Insurance|
|A broad category that includes several different types of insurance (term, whole, variable, annuity, etc.).||✔|
|A very specific type of life insurance meant to cover a person’s funeral costs when they pass.||✔|
|Can pay a lump sum or monthly amounts. Depending on the type of insurance and the amount of coverage, benefits can be delayed.||✔|
|Pays a lump sum almost immediately upon death because the amount of coverage is much smaller than other types of life insurance.||✔|
|Policies can be in the millions of dollars.||✔|
|Policies usually don’t exceed $50,000||✔|
|Often requires a medical exam to qualify. Family history, health questions, and occupation are often a determining factor as well.||✔|
|Often does not require a medical exam because coverage is issued based on answers to health questions on the application.||✔|
|Insurance may expire before you die, depending on the type of policy you select.||✔|
|The policy remains in effect until you die as long as premiums are paid.||✔|
|May not accumulate cash value.||✔|
|Usually accumulates cash value.||✔|
What Burial Insurance Isn’t
Unlike traditional term, whole life, and universal life policies, burial insurance is specifically designed to cover one-time and short-term expenses. It isn’t meant to replace income or cover large expenses like purchasing a home or paying for college. It isn’t a type of retirement plan or investment either.
Its primary use is covering funeral costs, but your 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 your passing (phone bill, utility bills, car payment, etc.).
Still Have Questions About Burial Insurance?
Funerals can cost thousands of dollars, but many of us haven’t planned ahead. This means that our bereaved family and friends must be responsible for covering the costs – and the accompanying hardships – of our final wishes. By including a special provision of burial insurance in your estate planning, you can ease the process of paying for a funeral.
At Lincoln Heritage Life Insurance Company®, we know how complicated the world of life insurance can be. We want to make sure that, if you’re considering a policy, you fully understand all the nuances of each option so you can make the best decision for your unique situation.
For more than 55 years we’ve been helping families get peace of mind, knowing they can continue to provide for their loved ones’ needs after their passing. Our policies are quick and easy to qualify for because coverage is issued based on answers to health questions on the application. They don’t require a medical exam or physical, and they give your family the cash insurance benefit they need within 24 hours of claim approval.
©2023 Londen Insurance Group, Inc. All rights reserved. Funeral Advantage is a life insurance policy underwritten by Lincoln Heritage Life Insurance Company on form ICC13FEAPPR. Not available in New York or Washington. Lincoln Heritage Funeral Advantage and Lincoln Heritage Life Insurance Company are registered trademarks of Londen Insurance Group, Inc. By submitting your information, you agree to be contacted even if you are on any internal, state or national “Do Not Call” list.