Standard Life Insurance vs. Preneed Funeral Insurance
When it comes to advance funeral planning options, one of the most common choices is funeral insurance. Like a life insurance policy, funeral insurance allows you to pay premiums during your lifetime with the promise of a payout upon death. Your beneficiary is then able to use those funds to finance your funeral, so that the financial burden is not placed directly onto your family’s shoulders.
How are They Different?
At its most basic core, traditional life insurance is intended to support life. Ranging in amount from a few thousand dollars to millions of dollars, these are flexible financial arrangements that allow you to put a “safety net”under your family. It doesn’t matter whether you’re 25, 45, or 65, life insurance is meant to provide financial support to your loved ones in the event of your untimely death. That is, your family gets the money they need to pay for the mortgage, college, and even daily life as they struggle through a sudden loss.
Preneed funeral insurance is not intended to provide financial support beyond cremation or traditional burial arrangements. Ideal for older individuals who are facing end-of-life issues or for those who want to create a separate funeral arrangement option independent of other financial plans, this insurance is designed to cover the expenses of a funeral contract you’ve already pre-arranged with a funeral home or provider.
Why Preneed Funeral Insurance Works
At first glance, it might seem a bit excessive to have both life insurance and funeral insurance, since your family could theoretically use part of the life insurance funds to cover your funeral costs. However, funeral insurance has been specifically designed to facilitate the funeral planning process.
For example:
The beneficiary of a funeral insurance policy is usually a funeral home, as opposed to a member of the family. This ensures that the contract you set up with the funeral home stating your wishes and funeral arrangement plans is followed to the letter, and that the funds you earmarked for this purpose are used exactly as you want them to be.
There is no deficiency in coverage. Because most preneed funeral insurance plans are set up through the funeral home of your choosing, you can get exactly the right amount of coverage you need. Choose your funeral arrangements and lock in today’s prices…and let the funeral home worry about the rest. It is a very simple way to approach a sometimes complex process.
The beneficiary of a funeral insurance policy will have access to the funds in one or two days following death, so that the immediate funeral costs can be covered. Life insurance, on the other hand, typically requires a disbursement period of weeks to months—long after the funeral has been completed and paid for.
Is there Flexibility in a Funeral Insurance Plan?
When you go through a reputable provider, your funeral insurance plan is like any other financial arrangement that can change over time. In many cases, the funds you pay in will be placed in a trust. Should you wish to transfer to a different funeral home (or if the funeral home in question goes out of business), your contract should offer you the opportunity to withdraw funds or move the policy. This option may come with a fee, but not such a large one that it will have a huge impact on your long-term financial plans.
You should also have flexibility in payment options. You may be able to pay for the entire funeral policy at once, or you might want to spread the payments out over the span of a few years to reduce the strain on your family finances.
Preneed funeral insurance is a modern solution for an age-old dilemma; there is no better way to finance your funeral without putting a strain on your family. Advance funeral planning gives you control over your burial arrangements and your life—and that’s what really matters while you enjoy the years you have left on earth.
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