Preparing for the inevitable is something no one wants to think about, but it’s something everyone has to do eventually. As you prepare for what will happen after you leave this world, you have to do some research on the best course of action.
Should you opt for life insurance? Or, should you go with burial insurance? What’s the difference? The following is a breakdown of the two and which one may be best for you and your needs.
The Benefits of Burial Insurance
Burial Insurance policies are often marketed mostly to the elderly. The benefits of it meet many emotional and practical needs.
1] Easy to Get.
Securing a burial policy is as easy as picking up your telephone or going online. You don’t have to be subjected to a medical exam. You do have to answer a few questions, such as some concerning your age, serious conditions you may have, and smoking history.
Plus, there are a couple policies you can find that guarantee acceptance. Others require you to pay a two-year premium before you can collect, and many only cover you until 100 years of age. This isn’t an issue for seniors nowadays, but life expectancy is slowly rising.
Compared to other forms of coverage, burial insurance is a lot cheaper. You can find affordable burial insurance from AARP between $5,000 to $10,000. While this is very appealing, be sure to always do your research to ensure you’re getting the best deal possible.
3] Alleviates Financial Strain from Loved Ones.
Getting a burial policy is a good way to handle the costs of your funeral and take care of all of your bills. It takes the financial strain of burial off your loved ones. The goal of these policies have good intentions and work for some, but they aren’t the only option you have to ensure your family is taken care of when you’re gone.
How Life Insurance Compares
Life insurance policies pay a certain amount of money to your loved ones when you die. This means that if your death benefit is $700,000, then your family will receive a payout of that much money when you die. That money can be used to take care of expenses, pay off debt, or whatever they desire to use the money for.
While burial insurance only really has one option, life insurance policies have a range of options to choose from. Two major types of life coverage include whole and term life insurance. A whole policy is designed to last for your whole life. A term policy is set to last for a pre-determined amount of time.
A major difference between the two types of policies is that life insurance has the possibility to accumulate cash value. This means that you have the ability to cash it out if you need to. You’ll lose the death benefit, but you have the cash available if you need it. With a funeral policy, you don’t get this option.
A Third Option
While both life insurance and funeral insurance each have their advantages, there are other options out there. One other strategy is putting a little way in a savings account set up for that specific purpose.
Set up the account with your designated survivor and allow the money to be withdrawn immediately upon your death. This way you don’t have to deal with premiums. Plus, survivors don’t have to wait for a probate or an insurance check.
The Bottom Line
Before committing to any policy, consider your goals. It’s important to set aside money that will effectively help your loved ones when you’re not there. If you need money to just take care of funeral costs, don’t spend a whole bunch of money on life insurance.
If you feel that they need more money set aside for when you go, then choose cash value life insurance. The important thing to remember is to choose what feels right and gets you the most for what you pay for.