Funeral Insurance

Despite being a bitter pill to swallow, many people like to preplan their funerals. People like to preplan their funerals for various reasons ranging from their perfectionist nature to die with the certainty that they will get a decent funeral. Funeral insurance is taken to ensure you get the services you would like in a funeral home of your choice. It entails everything from a burial site to your coffin. Most funeral insurance companies help you plan your funeral to the tiniest detail and make payment for your funeral in advance. As mentioned above, funeral insurance provides no financial benefit and is purchased with the sole purpose of financing a funeral as per your wishes. Most people perceive funeral insurance as a straightforward option. However, contrary to the popular belief, funeral insurance requires as much homework or maybe even more than other types of insurance such as life insurance, car insurance, home insurance, credit card insurance etc.

As funeral insurance is intended to cover funeral expenses only, it mostly has an upper limit of $10,000. Most companies provide the option of prepaying some expenses such as cost of the burial site that are excluded from the funeral insurance policy. Funeral insurance companies calculate your funeral expenses by working out the details of your funeral, taking into account your life expectancy and including a profit margin and the inflation rate. Funeral insurance companies differ in their approach of payment of funeral expenses. Some provide a policy on aggregate expenses whereas others issue policies on behalf of specific expenses as prescribed by the funeral home of your choice. The former lists down your funeral expenses such as cost of the casket, burial site, memorial service etc and provide a more accurate face value. Funeral insurance policies also vary in whether they increase in value with the passage of time or not. This is a significant feature of the policy and must be taken into consideration when buying one.

In comparison to other types of insurance, the risk of funeral insurance to the insurance company is minimal. For example if you purchase a $6000 funeral insurance policy you will have to pay full amount to the insurance company either in installments or in lump sum. The funeral insurance company is liable to pay the same amount for your funeral depending upon whether your policy increases in value over time or not. One important point to note is that you cannot claim the value of your funeral insurance policy in any case and it will be spent on your funeral expenses only. The beneficiary of your funeral insurance policy is a funeral home your choice. Most funeral insurance companies release claims within twenty-four hours and provide complete peace of mind to their policyholders. However, all new members have to wait for a six-month period before cover commences but if a member dies suddenly then one-month period applies. Proceeds of your funeral insurance policy do not contribute to the revenue of the funeral home and is used to finance your funeral services. Funeral homes generally place the proceeds of funeral insurance in investments vehicles such as term deposits and trust funds etc. This provides for inflation and administrative costs of the funeral homes. Some funeral insurance companies provide special discounts to certain people. In case of cancellation the funeral insurance company claims a penalty of 20 percent of the value of the policy as its administrative expenses.