Death Insurance Policies - Which is the Right One?

Death insurance, or Burial Insurance as it is more commonly known, is a way of making sure that your funeral costs are taken care of before the event comes. It is a way of preparing yourself for the inevitable whilst making sure that loved ones are not left with the responsibility. You will find many options when it comes to insurance relating to life and death and it certainly pays to find out more about them.

The simplest form of death insurance comes in the form of a policy completely devoted to paying all the funeral costs and that’s it. This kind of policy is referred to as a Pre-Need Insurance policy which caters solely for this need. Widely available through funeral homes and funeral directors, the only named beneficiary with this policy is either of these establishments. In this way the policy covers the funeral costs alone and cannot be used for any other purpose.

The most basic form of death insurance is called a Pre-Need Insurance Plan. This policy provides money that can only be used to pay for the funeral costs; it is not permitted to use the money towards any other payments. Typically, Pre-Need Insurance is available from funeral parlors and funeral directors, who incidentally, are the only organizations that can be made the beneficiary of this kind of plan. Essentially, this ensures that the money is not allocated to anything else but the funeral expenses.

It is possible to buy death insurance whereby a one-off lump sum is paid out to a nominated beneficiary in the case of your death. The fundamental difference between these options and that of the Pre-need Insurance plan is that the cash can be used for other things as well as the fees for the funeral. If there are any invoices for hospital treatment, for example, the funds could be used to pay this off. When you are searching for this kind of policy it will either be termed as Burial Insurance or Final Expense Insurance.

If you decide to name any of your children as the beneficiary or take out a single life policy, insurers recommend that you hold the policy in some form of trust. This is mainly to take care of any matters that rise in relation to tax, which can be important where children are beneficiaries. You can take out a joint policy for you and your partner; however, check with the insurer as they may only pay out after the first death and not the second.

When searching for death insurance policies you will find that there are two main types to choose from. Whole Life Insurance is designed to last from the moment it starts until the time of your death. There is no waiting period to contend with if you choose this option. Term Life Insurance lasts from the time a policy is started until a pre-determined end date; thus it is limited by a set period of time. If you die whilst the policy is still active, then the beneficiary will receive the benefit. If not, then the policy is simply cancelled. You will find that the premiums payable for the latter policy type is normally cheaper than the premiums for the former type.

Death Insurance policies present several options for the buyer. You can opt for a Term Life Insurance policy which will only run for a certain amount of time. If you die during the time that the policy is live then your beneficiary will receive the full death benefit. Should you live past the expiry date of the policy, no funds are released and the policy is void. Whole Life Insurance runs until your death and does not have an expiry date at all. It is common for Term Life Insurance Premiums to be slightly less than Whole Life Insurance premiums due to the fact that they are not indefinite.

Putting off buying death insurance is something that we should all rectify as soon as possible. If you leave it too late then it may be too late! Having the mechanisms in place to pay your funeral costs and to pay off any debts will give you peace of mind so that you can enjoy your remaining years.

Tagged with: burial • Death • Death insurance • dying • final expense • funeral • funeral costs • Funeral insurance • Life Insurance

Filed under: Life Insurance

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