Many people see life insurance as a way to replace income and provide for their family. That's an important part of life insurance, but you should also consider final expenses. Even if your family is well-off, it can still be difficult to come up with the needed cash in a short amount of time. You may also have disagreements between family members over who should pay what. By ensuring you have insurance for final expenses, you can avoid these concerns.
What is Final Expense Insurance?
Final expense insurance covers things like funeral planning and the burial. It is a special type of life insurance and works similarly to a general life insurance policy. You pay premiums over time, and the younger you are when you first buy the policy, the lower your premiums typically are. You can obtain coverage for final expenses as part of a separate burial insurance policy, as an optional add-on to your general life insurance policy, or by purchasing a general life insurance policy.
What's the Difference Between a Separate Burial Insurance Policy and General Life Insurance?
The main difference between having separate coverage for final expenses is how easy it is for your family to gain access to the money. With designated burial insurance, there is no question about what the money is for, and your insurance company may even be able to pay the funeral home directly. If you rely on a separate life insurance policy and don't specify how the money is to be used, the money will become part of your estate and go through the probate process. If you have a complex estate with multiple heirs, it may be best to have separate burial coverage.
How Much Coverage Do You Need for Final Expenses?
The average cost for a funeral and burial is around $10,000. However, this can be higher based on your location and preferences. If you've already purchased a burial plot, your costs may be lower. Like with any other insurance purchase, you will need to consider your needs and calculate the expected costs. Be sure to review your policy at least every few years to make sure that it still provides you with adequate coverage.