When a loved one passes away, you may be left scrambling to pay for the funeral. You know there is a life insurance policy in place, but you might not see that money for some time. And you’re not sure if it will cover the whole cost. This is all happening while you’re dealing with the stress that comes with loss.
Many people find themselves in this situation. While life insurance is an option, a prepaid funeral policy may be a better choice. Keep reading to understand the differences between funeral policies and life insurance.
What Is Life Insurance?
A life insurance policy is a contract with an insurance company in which you make contributions so that your loved ones receive payments once you pass away.
General Life Insurance
The purpose of life insurance is to take care of your surviving loved ones when you pass. Life insurance policies replace lost income and help to pay off debts and taxes.
With life insurance, your family will have to pay the funeral home up front at the time of the funeral. But, they can wait weeks or even months to receive their reimbursement. This leads to frustration and financial strain on loved ones during a difficult time. This also depletes funds intended for living expenses, mortgage payments or other bills.
Final Expense Plans
Some life insurance policies offer a burial insurance (called a final expense plan). This additional purchase offers funds to help your beneficiary pay for funeral expenses. The advantage of this plan is that, unlike most life insurance policies, it doesn’t require a medical exam. As a result, many people can qualify, driving up costs.
What Is a Prepaid Funeral Policy?
Prepaid funeral policies are specifically used to pay for your funeral. By preplanning your funeral arrangements, you’ll know the final price, which is locked-in. This saves you and your family from the rising funeral costs and ensures that the policy covers the full expense.
This policy is transferable if you move to another state. In most cases, if you pass unexpectedly before you pay off your balance, the insurance covers the remaining payments.
Why Do You Need Funeral Insurance?
Prepaid funeral insurance saves surviving loved ones time and hassle, and leaves the life insurance payout to replace lost income. The policy pays the funeral home at the time of death, and the funeral home works with the insurance company to allocate the appropriate funds for the funeral.
As a result, your family won’t have to worry about paying bills or filing paperwork to receive reimbursement. They can focus on spending time together and grieving.
Download Our Free Funeral Arrangements Guide
Saving your family from your funeral bills is just one of the benefits of preplanning. Our new guide also offers valuable insight into:
•Why more people are preplanning their funerals.
•How much money you can save by preplanning at different ages.
•Why a preplanned funeral policy can help make you eligible for Ohio Medicaid.
Download our free Seniors Guide to Funeral Arrangements: How Preplanning Can Save Time, Money and Worry. Click on the image below.