What is Covered in Pre-paid Funeral Policies?
A funeral insurance policy is just what it sounds like – an insurance policy to cover the costs of someone’s funeral. Funeral insurance is also known as burial insurance or pre-need insurance. Funeral insurance is not the same as life insurance. However, sometimes the proceeds from a life insurance policy are used toward paying for funeral expenses for the insured once they have passed away. This is why people who have life insurance policies may not see a need for extra funeral insurance, especially if the life insurance policy amount is quite large.
How to Qualify for Funeral Insurance
Typically, in order to qualify for life insurance, you have to answer a series of health-related questions and undergo an examination by a physician. This is to ensure that the person applying for the policy is relatively healthy and they should not expect to die anytime soon. That way, the policy holder will have more time to pay in on a policy before they collect any proceeds from it, which helps offset the cost to the insurer. Check FAQ’s about pre-paid funerals.
Final Crossing by Donald Lee Pardue, on Flickr. This work is licensed under a Creative Commons Attribution 3.0 Unported License.
Not every one will qualify for life insurance. In fact, if you have any pre-diagnosed conditions, you more than likely will not qualify. Further, if you engage in certain risky behaviors that makes death more likely to occur prematurely – such as performing a dangerous job, engaging in extreme sports or smoking – you are generally considered uninsurable. Insurance companies just do not want the risks associated with insuring people who may not be around long enough to make much money off of, which is both unfortunate and true.
Funeral insurance operates a bit differently than life insurance and has less stringent qualifications to meet. In fact, virtually anyone qualifies for burial insurance, regardless of pre-existing conditions, lifestyles or behaviors. The main reason for this is that funeral insurance policies are often insured at exponentially less than traditional life insurance polices. Funeral insurance policies may be only worth up to $20,000 while life insurance policies can run into the millions of dollars, depending on the type of coverage a person chooses.
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Why Funeral Insurance Companies is Less Selective
The cost of an average funeral in 2007 was, roughly, $7,000. So a funeral insurance policy worth $10,000 – very small in comparison to typical life insurance policies – would more than cover basic funeral costs with a little financial cushion to spare for comfort. Because their overhead is so low in terms of the money paid out in funeral insurance benefits, insurance companies do not have to be as selective in their clientele as they do for traditional life insurance policies. They are able to offer coverage for just about anyone and are able to do so with far cheaper monthly premiums than those paid on traditional life insurance policies.
Before signing your name to any insurance policy, you want to do your research and be sure that you understand everything that is included in the wording. Contact a reputable insurance provider today to discuss your personal funeral insurance needs and find out how they can help choose a policy that will best meet those needs.
