What is Funeral Insurance?

Funeral insurance, also known as pre-need or burial insurance, is a type of life insurance policy that you buy specifically to pay for final expenses. Prepaid funeral expenses include the funeral service, caskets, flowers, etc. The burial policy benefit is a prepaid funeral.

Burial insurance (prepaid funeral insurance) is a basic issue life insurance policy that covers people for their funeral and burial expenses. Prepaid funeral insurance is promoted as a way to pay in advance for your funeral expenses so that your family won't have to pay for your funeral. There are many things you can do to make your death easier on the wallets of those you love. Preplanning your funeral and purchasing prepaid funeral insurance saves money and grief, as well as deciding whether you want to be buried in a casket or cremated and put into and urn as well as other funeral arrangements you may wish to make.

Prepaid Funeral and Prepaid Funeral Insurance

Prepaid funeral insurance is a popular option for financing funerals. According to a recent article in The Washington Post, about one-third of funerals in the U.S. involved some sort of prepaid funeral or burial insurance. With funeral insurance, not only can you prepay for your funeral, you can specify many of the details of your funeral- including whether you want to be buried or cremated- and even the casket or urn style- amongst other details.
Understandably, most people do not want to leave their funeral expenses and the financial burden therein on their loved ones, so purchasing prepaid funeral insurance is a way to not add financial stress to the emotional stress felt by grieving family. Prepaid funeral insurance is a wise financial decision, as most funerals cost well over $10,000. Whether pre paying for your funeral (commonly called pre-funding your funeral) or purchasing prepaid funeral insurance, relieves your family from having to spend thousands on your funeral or waiting for your estate to clear probate to obtain the funds to pay for your funeral.

How Pre-paid Funeral Plans work

It is important to note that life insurance and funeral insurance are similar, but not the same. Life insurance pays one lump sum in the event of death to be used as the family sees fit. Funeral insurance, on the other hand, pays for final expenses only and is not given in a lump sum check.

Pre-paid funeral plans can be bought in two ways, primarily: from funeral insurance companies or from local funeral directors. Most providers give two options, a pay-in-full option, or installments over 12 months to 120 months. Administration fees and interest add up while paying in installments for a long period of time.

There are several ways to arrange a prepaid funeral – you can purchase a prepaid funeral package, obtain prepaid funeral insurance, or arrange a funeral trust. For the purposes of this article we’ll focus on prepaid funeral insurance. Prepaid funeral insurance plans can by highly individualized and can cover services and products such as the type of casket, urn or vault, the grave headstone, the cemetery plot, and even the flowers displayed at the service.

Advantages of Funeral Insurance

The average cost of a funeral in 2007 was $6,500 - with total costs, including burial, reaching over $10,000. As large as that number is, statistics show the cost of a traditional funeral doubles every ten to twelve years. A prepaid funeral insurance policy or contract covers this funeral expense and offers your loved ones relief from the financial burden of a funeral. By purchasing funeral home insurance the prepaid funeral services are frozen at today’s prices. Funeral insurance often has an interest-free period that allows you to pay off the policy in full. Another advantage to funeral insurance is that accounts are generally tax-free.

In addition to the economical benefits, prepaid funeral arrangements allow you to organize your funeral exactly as you wish. There are many important questions surrounding end-of-life needs such as burial vs. cremation, place of burial, or how to cover funeral costs. There are also many simpler questions like which flowers to choose or what songs to play. By making these arrangements ahead of time, loved ones are not faced with difficult questions at a challenging time.

Things to consider before buying prepaid funeral insurance

Before purchasing funeral insurance, it is important to consider the laws of your state as they vary. Be sure to also closely examine what the policy does and does not cover. For instance, what if you die in a state other than your own? Does the policy cover the transportation of your remains? Or perhaps you might move – be sure the policy is transferable to another funeral home. It’s also important to specify the type of casket, headstone etc. to avoid any confusion for your family at the time of the funeral service. Also review any estate tax implications a prepaid funeral insurance policy might have.

Even with these considerations or potential pitfalls, a well planned prepaid funeral insurance plan is a sound financial investment that will protect your loved ones from the burden of financial and emotional decisions during their time of grief. By using a price comparison website, you can quickly find quotes from a wide range of companies. This saves you a lot of time and can save you money. Take the time to shop around to see what quotes turn up in an online search. This is a surefire way to compare quotes side by side. After all, you want a plan or policy that is sure to take care of the burial and funeral costs. Thus, you need to make sure that it is not only inexpensive in terms of the monthly payments but that it includes everything necessary for when the time comes to cash this policy in.

Funeral Insurance: the Fine Print

While it’s true that some funeral costs are guaranteed, your family could still find themselves paying for parts of the funeral not covered by a policy. Prepaid funeral services from a basic policy may not include a church service, family transportation, or use of the chapel, and may put a limit on the distance they’ll travel to collect the deceased. Make sure you check the details of a funeral plan before you purchase it. Prepaid Funeral insurance will protect your family from un-needed financial stress. Insurance agents can educate you  about different policies, and many funeral homes also have licensed funeral insurance agents as staff members to assist you as well.