Updated: Feb 28

Final expense insurance can protect your family from the burden of funeral, burial and even medical expenses.

Two common types of funeral expense life insurance policies are burial insurance and preneed funeral insurance.* Having either one of these types of funeral expense life insurance policies can allow you to plan ahead for the costs associated with your funeral/final expenses.

However, there are key differences between the two.

Before deciding on one or the other, here are the basics of how each one works.

Burial insurance

Burial insurance is a type of funeral expense life insurance policy designed to cover the cost of your funeral or cremation expenses when you die. Because many people don't realize that funerals can cost upwards of several thousand dollars, they don't often think about planning ahead. This type of situation can sometimes lead to a financial hardship on families or loved ones who must cover the costs. Burial insurance policies can vary between life insurance companies, so you may find it offered in the form of a term policy or whole life policy. Generally speaking, the death benefits for burial insurance are low, ranging anywhere between $5,000 up to $25,000 (although some insurers may offer higher limits).

After you die, burial life insurance pays the death benefit of your policy directly to your beneficiary who can use the money in any manner. For example, if you have a $15,000 burial insurance policy and funeral expenses came in at $10,000, your beneficiary might choose to use the additional funds to pay for other final expenses such as outstanding medical bills, legal costs, or any other outstanding debts you may owe.

Preneed funeral insurance

Not unlike burial insurance, preneed funeral insurance is designed to set aside funds for your funeral, before the need arises. It is another type of insurance policy that aims to protect your loved ones from shouldering the financial burden after you die. It covers the costs of predetermined expenses such as standard funeral home services, funeral merchandise, church and burial services. In some instances, this type of policy can protect against inflation and the rising cost of funeral expenses by lockinginto today's prices for services and merchandise. It, too, can be offered as either a term life policy or type of permanent policy. However, instead of paying the benefits of your policy to your beneficiary when you die, the money goes directly to the funeral service provider of your choosing. At the time of your death, preneed life insurance proceeds are often made payableimmediately to an assignee (typically the funeral home) to cover costs with little (if any) delay. Once your policy is paid in full, itremains in effect for your entire life

Can I buy burial insurance for my parents?

Understandably, many of us haven’t discussed the price tag on our final send- off. However,preparing now can help families avoid serious financial struggles later.The first step is to talk to yourparents about their personal wishes.

Some experts recommend following the 40/70 rule: By the time you’re 40 and they’re 70, talk to themabout final arrangements and critical aging issues.

What kind of funeral do they want?

Would they like to be buried or cremated?

What kinds of insurance for parents would they need?

It might feel scary to have this conversation, but it more than likely will make everyone feel betterabout what’s to come. Depending on their wishes, it’s a smart idea to plan for enough insurance tocover the maximum expected cost of the funeral, plus any additional expenses, like medical bills.

If you’re considering buying final expense insurance for your parents, there are a few steps that you’llneed to take:

-Your parents will have to consent, if they’re legally capable of doing so.

-You’ll need their Social Security number and other personal details.


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