How is funeral expense insurance different from life insurance?

Many people who have life insurance do not see a need to purchase additional funeral expense insurance. This blog discusses why it may be important to purchase additional insurance to cover your funeral expenses to avoid unnecessary fees and interest on unpaid balances after the funeral services have been completed.

It is first important to identify what is funeral expense insurance versus traditional insurance. This type of insurance is purchased at a lower face amount compared to traditional life insurance. For instance, with a traditional plan, a person may need to use the funds to pay off their debts and mortgages and maintain a certain lifestyle for their spouse and children. Funeral expense insurance is used exclusively to provide immediate funds for a person's funeral.

There is no medical exam with funeral expense insurance. You have to answer a few medical questions during the application process, and there is no underwriting. Traditional insurance policies, on the other hand, require a paramedical exam and underwriting before approving coverage. With funeral expense insurance, you are usually issued policies within a week or two instead of sometimes waiting over a month for traditional insurance approval.

Unlike traditional insurance, funeral insurance policy funds are usually dispersed within 24 hours after the funeral service is provided. However, there is usually a lengthy waiting period to receive funds with traditional life insurance policies because the beneficiary has to provide death certificates and other required documentation to the insurance company. This can sometimes take months to settle your claim and receive the money to pay for services. As a result, you will incur unnecessary fees on outstanding balances after the funeral services have been performed.

Many people usually expect to use their savings when to fund their funeral but do not realize that in the last six months of their lives can be the most expensive time in their lives. Unfortunately, at this time, many people spend up their savings and do not have any money to contribute to the funeral. This is where funeral expense insurance can come in handy. A small policy can be made available to the family within 24 hours after the services have been performed. This will help ease the family's financial burden at the time of grief.

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Created on Sep 2nd 2020 03:02. Viewed 264 times.

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