Burial
Insurance: A final gift
The
senior years are supposed to be the "golden years," but
many folks who are trying to eke out a living on Social Security
have found their lives far more complicated than they ever thought
senior living would be. Their frustrations are further exacerbated
when they discover that the group life insurance which they paid
into all their lives via their employers is simply gone.
Fortunately, you don't
have to scramble to start saving every spare dollar for your final
expenses. Several reasonably priced solutions are available if you
are suddenly caught with no life insurance. Available options are,
Pre-needs insurance, Burial insurance, Easy Issue Insurance, and
Graded Benefit Life Insurance.
Pre-needs insurance—also
called "final expense" insurance—is an alternative that
has become more popular in recent years in spite of fears about
scams and policies that could not be used. With this type of life
coverage there is generally no medical, health or physical exam
required. And if purchased from a reputable undertaker—with the
proper provisions in place—pre-needs insurance can take care of
the final expenses so your family won't have to.
Pre-needs insurance is
simply a type of policy for which you pay a premium, and the benefit
goes to the funeral home. The policies can be written in a variety
of ways. For example, you can pre-select everything you want at
your funeral, from type of casket, to service accessories, number
of cars, and so forth. When you have made your selections, the funeral
director can add all the costs and sell you an insurance policy
with a face value that will cover your choices. Usually you will
receive some sort of guarantee that the costs will not exceed the
face value of your policy. Also, you want to make sure the policy
can be moved from one state to another in case you decide to relocate.
With another type of
final expense policy, you simply choose a face value that you do
not want your funeral to exceed. When you die, the benefit will
go to the funeral director first. However, if the face value exceeds
the actual cost at the time, any additional funds should go to a
contingent beneficiary. It's something you have to ask about as
many funeral directors will assume that they are to have the entire
face amount regardless of costs unless your contract indicates something
different.
Burial insurance is often
so-named because people think of it as just enough life insurance
to pay final expenses. However, when purchased through an insurance
company, it is actually just a small whole life policy. Because
of the small face value, there will usually be limited health questions.
If your health is such
that you cannot get whole life burial insurance, you can still get
a graded benefit life. With the graded benefit, you must live two
years before the entire face value will be paid. If you die in the
first two years, your beneficiary receives the premium plus interest—except
in the case of an accident whereupon he/she receives the entire
face value. A graded benefit policy is a "guaranteed issue,"
meaning you cannot be turned down. It is more expensive than whole
life, but is a good policy if you have no other options.
When calculating the
amount of final expense insurance you will need, you should keep
in mind the following expenses. Some are optional. Your choices
plus the amount of money you want to leave for final unpaid bills
like medical bills and taxes should influence your decision. You
may find additional peace of mind by allowing a reputable agent
to sit down with you and help you decide how much coverage you actually
need.
Key Features
of Burial Insurance
- Burial insurance is
whole life with cash value
- Premiums and benefits
remain level
- Easy medical underwriting
- Face values available
to fit your needs
- Simplified application
- Generally, anyone
under 79 can be insured even if it means a graded benefit
- Benefit is paid to
a beneficiary tax free
- Double indemnity available
in the event of death by an accident
- Loans can be taken
against the policies
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