urial Or Funeral Expense Whole Life Insurance: What It Is And Who Should Buy It

 

Life insurance is a vital financial tool that can protect your loved ones from the unexpected. But not everyone needs a large amount of coverage or a complicated policy. Some people just want a simple and affordable way to cover their end-of-life costs and funeral expenses.

That’s where burial or funeral expense whole life insurance comes in. This is a type of permanent life insurance policy that covers your end-of-life costs and pays a tax-free amount to your named beneficiary after your death. It can be an accessible and convenient option for people who are 50 and older, who have health issues, or who need a small amount of coverage.

But burial or funeral expense whole life insurance is not for everyone. It has some drawbacks that you should be aware of before you buy it. In this article, we will explain what burial or funeral expense whole life insurance is, how it works, who should buy it, and how to shop for it.

How Burial Or Funeral Expense Whole Life Insurance Works

Burial or funeral expense whole life insurance is a type of permanent life insurance that covers your end-of-life costs and pays a tax-free amount to your named beneficiary after your death. It has some features and benefits that are similar to other types of permanent life insurance, such as:

• Lifetime coverage: Burial or funeral expense whole life insurance provides coverage for your entire life as long as you pay the premiums. Unlike term life insurance, which only provides coverage for a specific period of time (such as 10, 20 or 30 years), burial or funeral expense whole life insurance does not expire or need to be renewed.
• Fixed premiums: Burial or funeral expense whole life insurance has fixed premiums, meaning the amount you pay every month won’t change. Unlike other types of permanent life insurance, such as universal life insurance or variable universal life insurance, which have flexible premiums that can vary depending on your cash value performance or market conditions, burial or funeral expense whole life insurance has predictable and stable premiums that are easier to budget for.
• Cash value: Burial or funeral expense whole life insurance has a cash value component that grows over time and can be used for loans or withdrawals. The cash value of a burial or funeral expense whole life policy typically earns a fixed rate of interest that is guaranteed by the insurer. You can access your cash value by taking out a loan or making a withdrawal from your policy. However, loans and withdrawals will reduce your cash value and your death benefit, and may incur fees or taxes.
• Tax advantages: Burial or funeral expense whole life insurance has some tax advantages that can benefit you and your beneficiaries. The cash value grows on a tax-deferred basis, meaning you do not pay taxes on the interest until you withdraw it. The death benefit is generally paid out tax-free to your beneficiaries, unless it exceeds the federal estate tax exemption limit.

The main feature of burial or funeral expense whole life insurance is the death benefit. The death benefit is the amount of money that your beneficiaries will receive when you die.

With burial or funeral expense whole life insurance, the death benefit is usually ranging from $5,000 to $50,000. This amount is designed to cover your end-of-life costs and funeral expenses, such as:

• Funeral home fees
• Casket or urn
• Burial plot or cremation
• Headstone or marker
• Flowers
• Transportation
• Obituary
• Legal fees
• Medical bills
• Credit card debt

The death benefit can also be used for any other purpose that your beneficiaries choose, such as paying off a mortgage, funding a college education, or donating to charity.

The death benefit is paid to your named beneficiary after your death. You can name anyone as your beneficiary, such as a spouse, child, friend, relative, trust, charity, or organization. You can also name multiple beneficiaries and specify how much each one will receive.

Who Should Buy Burial Or Funeral Expense Whole Life Insurance

Burial or funeral expense whole life insurance can be a good option for some people who need a small amount of coverage and who cannot qualify for other types of life insurance due to health issues or age. But it is not suitable for everyone. Here are some scenarios where burial or funeral expense whole life insurance might be appropriate:

• You are 50 and older and have delayed getting life insurance. Burial or funeral expense whole life insurance can be a convenient way to get life insurance coverage later in life when you might have more health issues or less time to go through the underwriting process. If you are 50 and older and do not have any life insurance or enough life insurance, burial or funeral expense whole life insurance can help you secure some coverage for your family or beneficiaries. But you should be aware that burial or funeral expense whole life insurance gets more expensive as you age and might not offer enough coverage for your needs.
• You have health issues that might disqualify you from other types of life insurance or make you pay a higher rate. Burial or funeral expense whole life insurance can be easier to qualify for than other types of life insurance that require a medical exam or use accelerated underwriting. If you have health issues such as diabetes, high blood pressure, obesity, or a history of cancer, heart disease, or stroke, you might be able to get burial or funeral expense whole life insurance at a lower rate than full medical underwriting. But you still have to answer some health questions and disclose any major health problems or risky hobbies.
• You need a small amount of coverage for a specific purpose, such as covering your funeral costs, paying off your debts, or leaving a legacy. Burial or funeral expense whole life insurance can provide enough coverage to cover your end-of-life costs and funeral expenses, pay off your debts, or leave a legacy for your loved ones. But it might not be enough to cover your long-term financial goals or obligations, such as college education, retirement savings, or estate planning.

Burial or funeral expense whole life insurance is not the only option for people who need a small amount of coverage and who cannot qualify for other types of life insurance due to health issues or age. There are other alternatives that you should consider before you buy it. Here are some of them:

• Term life insurance: This is a type of life insurance that provides coverage for a specific period of time (such as 10, 20 or 30 years) and pays a death benefit if you die during that time. Term life insurance is cheaper than burial or funeral expense whole life insurance and offers higher coverage amounts (up to $10 million). However, term life insurance does not have a cash value component and expires at the end of the term. You might also have to go through a medical exam or use accelerated underwriting to qualify for term life insurance.
• Group life insurance: This is a type of life insurance that is offered by employers, associations, or organizations as part of their benefits package. It usually does not require any health questions or medical exam for the basic coverage amount (usually one or two times your annual salary) but it might require them for additional coverage amounts (usually up to four or five times your annual salary). Group life insurance is usually cheaper than individual life insurance but it has some drawbacks. You might lose your coverage if you leave your employer, association, or organization or if they stop offering it. You might also have less control over the policy type, the coverage amount, and the beneficiary designation.
• Preneed funeral plans: This is a type of contract that you sign with a funeral home to pay for your funeral services and merchandise in advance. You can either pay in full upfront or in installments over time. Preneed funeral plans can lock in the price of your funeral at today’s rates and avoid inflation. However, preneed funeral plans are not regulated by state insurance departments and might not be transferable if you move to another state or change your mind about the funeral home. You might also have to pay extra fees or taxes on top of the contract price.

How to Shop for Burial Or Funeral Expense Whole Life Insurance

If you decide that burial or funeral expense whole life insurance is right for you, here are some tips on how to shop for it:

• Compare quotes from different insurers: Burial or funeral expense whole life insurance rates can vary widely depending on the insurer, the policy type, the coverage amount, and your risk profile. You should compare quotes from different insurers online or through an independent agent or broker to find the best deal for your needs and budget.
• Check the financial ratings and customer reviews of the insurers: Burial or funeral expense whole life insurance is only as good as the insurer that offers it. You should check the financial ratings and customer reviews of the insurers that you are considering to make sure that they are reputable, reliable, and responsive. You can use rating agencies such as A.M. Best, Standard & Poor’s, or Moody’s to check the financial strength and stability of the insurers. You can also use online platforms such as Trustpilot, Consumer Affairs, or Better Business Bureau to check the customer satisfaction and complaints of the insurers.

• Read the policy details carefully: Burial or funeral expense whole life insurance policies can have different features, benefits, exclusions, and limitations that you should be aware of before you buy them. You should read the policy details carefully and ask questions if you do not understand something or if you want to make changes to the policy. You should also look for any hidden fees or charges that might increase your costs or reduce your benefits.
• Consult an independent agent or broker if you need help: Burial or funeral expense whole life insurance can be confusing and overwhelming for some people who are not familiar with life insurance or who have special needs or circumstances. If you need help with choosing a policy, you should consult an independent agent or broker who can offer unbiased advice and guidance and help you compare different options from different insurers.

Conclusion

Burial or funeral expense whole life insurance is a type of permanent life insurance policy that covers your end-of-life costs and pays a tax-free amount to your named beneficiary after your death. It can be an accessible and convenient option for people who are 50 and older, who have health issues, or who need a small amount of coverage.

But burial or funeral expense whole life insurance is not for everyone. It has some drawbacks that you should be aware of before you buy it. It offers lower coverage amounts, higher premium rates, and fewer policy options than other types of permanent life insurance that require a medical exam or use accelerated underwriting. It also poses a higher risk for the insurer, which means that they might reject your application or charge you more based on your health and lifestyle.

Therefore, you should weigh your options carefully and compare different types of life insurance before you decide to buy burial or funeral expense whole life insurance. You should also shop around for the best burial or funeral expense whole life insurance policy that meets your needs and budget. And you should consult an independent agent or broker if you need help with choosing a policy.

If you are interested in getting burial or funeral expense whole life insurance, you can get a free quote online or contact an agent for more information. Burial or funeral expense whole life insurance can be a simple and affordable way to cover your end-of-life costs but it is not the only option. You should explore all your options and find the best one for you.