How Funerals are Covered by Insurance?

by Golden Memorial A business that feels like a family

Do you have enough money saved or a life insurance policy to pay for the costs of your funeral, burial, and any other associated costs? Many people start to think about this when they turn 50 and start approaching their senior years.

Are you one of those?

Are you thinking about how your family is going to pay these costs?

How can you save them from being burdened with the expenses, if you didn't prepare for the inevitable?

Well, not all hope is lost.

You may still be able to purchase a final expense insurance plan to offset those costs.

Final expense insurance is actually whole life insurance in a simplified issue format, meaning that no physical examination is required, but you will have to answer some health questions to get coverage. The insurance companies will do a background check with the Medical Information Bureau, and some also check prescription drug usage.

Final expense policies are available to you when you turn around 50 years old, and that is the best time to get a policy in place as long as you are healthy. Your premiums will be cheaper, and they don't increase. Policies cannot be canceled unless you fail to make payments. The required age and coverage amounts vary from company to company.

There is usually more than one type of policy available.

- Level premium policies are the best because they have an immediate death benefit generally payable to the beneficiary within three days.

- A modified or graded policy is more typical for individuals with some health issues, so the insurance companies either charge more for premiums or adjust the death benefit by a certain percentage depending on when the death occurs. For instance, if you die within the first year after taking out a policy, the insurance company may pay only 30% of the benefit. If you die in the second year, they may pay 70%. By the third year, most policies pay 100% of the benefit.

- Many policies include or offer for a minimal additional cost, a death benefit for accidental death, which would pay an immediate death benefit no matter which policy you hold.

- Other policies have a return of premium plus a percentage of interest paid if you die within the first two years, and the full benefit is paid in your third year and after.

There are choices available for a final expense policy, so it is good to shop around and select the one that is right for you.

So how are funerals covered by insurance?

The funeral insurance for seniors is immediately payable to your beneficiary. They will decide how the funds are spent. They could use the funds to pay for funeral costs, or they might decide the funds could be better used elsewhere, such as outstanding debts.

It is recommended that you meet with your beneficiary to discuss the type of funeral service you would like and all the costs involved. Go over any outstanding debts you may have that will need to be paid, such as taxes or credit card bills. You want to make sure you get enough insurance coverage so that your family will not have to stress over how they are going to pay for these necessities while they are grieving.