The Difference Between Burial Insurance and Funeral Life Insurance

Burial Insurance and Funeral Life Insurance
A life insurance policy is a safety net that comforts the beneficiaries left behind by the policyholder, in time of any post-death financial crisis. Basically, there are two types of life insurance policies. Permanent Life Policy and Term Life Policy. As names imply, the permanent type accounts for your whole life till your death, whereas the term life is responsible for a specific time period ranging from 10-30 years. Permanent life insurance policy further has two types: Universal Life Insurance Policy and a Whole Life Insurance Policy. At the death of a person, it is irrelevant whichever type of insurance he purchased during his lifetime. What’s important is that he made sure that his funeral costs were at least met by him, himself. Similarly, if he was privileged enough to have a fairly flexible and broader budget realm, he should try to cover his dependents with other future expenses, too. Both Term Life and Permanent Life policies offer a Burial and Funeral Expense Cutout. Then why is it better to separately buy Burial Insurance or Pre-Need Funeral Insurance? One might ask! Basically, for any life insurance policy to payout, the death benefit is a time taking process. The claim will be made, then documentation would be done, the claim would get approved, then you can get the Death Benefit payout. However,  for Term Life or Permanent 2 Insurance policies, the payout time period ranges from 16-60 days, after claim approval.  For Burial Insurance or Pre-Need Funeral Insurance, the payout is as quick as 24-72 hours. How do you get Burial Insurance or Pre-Need Funeral Insurance Payout in a Day? The claim for a 2 years active Burial or Pre-Need Funeral Insurance has the following instructions:
  1. Making a Call to Insurer.
  2. Making your claim for payout.
  3. Presenting a copy of the expired policyholder’s Death Certificate.
  4. A picture of his dead body at your home or funeral home.
  5. Forwarding a Beneficiary signed statement copy.
Follow these simple steps, the claim is approved and Burial Insurance or Pre-Need Funeral Insurance payout will be paid to the funeral home in 24-72 hours. The maximum time that any insurer would take will be 3 business days. Why Should I Choose Burial Insurance or Pre-Need Funeral Insurance Separately? The answer has been elaborated before but the main reason for this is the monetary difference. If you buy Whole life or Universal life policy and depend on its death benefit payout to pay for funeral expenses and ceremony. The death benefit is around $150,000 and it will take 16-60 days to pay the funeral home. If you have bought Burial or Funeral Insurance, you will pay the funeral home through your insurer firm in a day or two. The payout would be from $5000-$50,000. A decent and presentable funeral would cost you $10,000-$25000 at max. When you pay premiums for any whole life or universal life policy, monthly it will cost you around $150 for a Burial/Funeral Insurance, it’d be $30-$50. What is the difference between Burial Insurance and Pre-Need Funeral Insurance? Burial Insurance requires no medical exam, anyone without a fatal illness can opt for it. It will cost a 50-year-old, stable, and healthy guy only $40-$45 per month, as premiums. Premiums will stay leveled. For a woman the same age, it will cost $35 approximately. The payout for Burial Insurance usually ranges between $5000-$25000. Often, a good funeral ceremony can be held for $10,000. According to Recent Surveys, with Cremation it costs $6260, and viewing and burial $7360. Pre-Need Funeral Insurance is slightly different, but the purpose is the same. To cover funeral expenses immediately after death. It means purchasing insurance through a Funeral Home. The Policyholder contacts a Funeral Home and discusses all arrangements for his own funeral, ahead of his death.  He can decide which casket to use to which flowers to be used. It allows him to cut costs to save for his family too. It is not movable or flexible. The rates are decided way before his death, if the Funeral Home goes bankrupt or the policyholder dies away from home, he would not be insured, literally. In Burial Insurance, you name your beneficiary who will receive the death benefit payout, he will give money to the funeral home for administrative tasks. In Pre-Need Funeral Insurance, your beneficiary would be the Funeral Home. This funeral home is fixed and you cannot make any changes later on.

Which is better, Pre-Need Funeral Life Insurance or Burial Life Insurance?

The purpose of both is the same, payout is pretty much the same too. It is not important to compare them, though for people who want to be proactive, and usually take the initiative, it suits their personality to opt for Pre-Need Funeral Insurance. They can decide the minor details of their funeral themselves. Conventional old people who appreciate the burial and funeral procedures of the early 1900s are better suited for Pre-Need Funeral Insurance. As for other people, if they name a responsible beneficiary for receiving the payout and being the middleman between the funeral home and insurer firm, that works too.  That is slightly better because it is movable, and flexible, if the payout was $15000, and funeral home costs are $10,000, the remaining $5000 will go to that beneficiary, instead of the funeral home Funeral homes can go bankrupt and in case a policyholder dies away from his state, how would a fixed funeral home account for these drawbacks? Nevertheless, both are advisable.

What are better alternatives than Burial or Funeral Insurance?

The best option for any organized person is to keep saving a certain amount in a savings bank account, instead of giving it in the form of premiums. For any type of life or burial insurance, understand that a part of your premium goes to the Cash Value component of the Insurance policy and the remaining part goes to the Death Benefit payout. Instead of giving the monthly premiums, get organized and save that amount yourself in a high-yielding savings bank account. This is the best way to have maximum backup dollars for funerals and all other future financial crises.  People who are extravagant and bad at managing money should avoid this, and consult reputed brokers or insurer firms. 

Which are the best Burial or Funeral Insurance firms in the US?

  1. Fidelity: Overall top pick
  2. Mutual of Omaha: For accelerated death benefits
  3. State Farm: For customer satisfaction
  4. New York Life: For permanent life coverage
  5. Ethos: For no exam coverage
  6. Lemonade: For the best alternative