Is it Better to Buy Burial Insurance or Life Insurance?
At first glance, burial insurance and life insurance are the same thing: it is a payout that goes to your family or beneficiary when you die. Death is an inevitable part of the world we live in, and having an insurance policy in place for when that happens is a smart way to ensure your family has enough money to bury you without dipping into their own pockets.
However, burial insurance and life insurance are not the same thing. Depending on your goals and your current situation, you might find one type of policy preferable over the other.
- Amount of Payout: In most cases, a life insurance policy is going to be worth more than a burial insurance policy. Burial insurance is meant to pay for the funeral; life insurance typically goes beyond that to support your family for years after you are gone.
- Time it Takes to Receive Funds: Burial and/or cremation is usually done and finished within a week after death occurs, which means you may need to come up with the funds fairly quickly. Life insurance policies can take months to be processed and paid out. Burial insurance policies, on the other hand, are designed to get you the money you need when you need it.
- Medical Exams: The cost of life insurance typically depends on how long you are expected to live. (The longer you live, the more you will pay in, and the better your rates and policy will be.) To determine this, most life insurance policies require you to have a physical or undergo a medical examination. Burial insurance policies do not. Because they are planning for a “definitely when” scenario instead of a “what if” scenario, they do not need to know the current status of your health.
- Overall Costs: When you break the costs down by month, burial insurance is likely to be the more expensive option of the two (especially if you are getting the policy past the age of 60). However, over the life of the policy (which oftentimes takes decades), life insurance is likely to end up costing more. It all depends on when you get the insurance and how long you live after that.
- Beneficiary Options: One of the unique features of burial insurance is that many policy holders name a funeral home as the beneficiary instead of a family member. What this does is ensures the money goes directly toward the funeral, usually in accordance with a contract for services you and the funeral home have already gone over together.
There are pros and cons to each type of insurance, so always be sure to understand your options before you sign up for either one. Burial insurance and life insurance are not meant to cover the same types of situations, although they can both give you great peace of mind.