A Closer Look at Funeral Insurance
Jun 28th 2018
The marketing of funeral insurance products are often strikingly the same but some may not be as straight forward or simple as they may initially appear. It may also not provide the coverage needed when death occurs so its important to take a look at this type of insurance before making any type of purchase.
Most people consider getting funeral insurance because of the rising cost of funerals. It is a way for families to feel less financial burden when a loved one passes and the surviving family members are left to tend to the costs of the final arrangements. Funeral insurance is a good thing to consider however, you need to be aware of the details or you may not be getting what you think you will get in the end.
Insurance agents are the ones whom you typically would speak with regarding this type of insurance. Remember, they are not funeral directors. Although some agents will have a fundamental understanding of the average costs of a funeral, they will have no idea what your funeral will cost as well as other final expenses. Avoid purchasing too little or too much coverage, but make sure you have adequate protection.
Do not purchase any type of insurance without first pre planning your funeral and identifying the cost of the services. This will give you a clear idea of how much coverage you need. Seek out a reputable funeral home and work with a funeral director to identify such costs, if necessary. Often, the funeral home will have preneed services and can give you a detailed estimate on exactly how much you will need.
The preneed services at a funeral home will guarantee or hold the cost of the funeral service and other final expenses for the length of the contract or agreement. The funeral home will generally work directly with an insurance company on these arrangements. After meeting initially with the funeral director, an insurance agent will then meet with you to review various policies available.
All persons up to age 85, and in some case up to age 90, are eligible for funeral insurance. Most insurance company require minimal health information or documentation to qualify since the policies are typically written for those in poor health.
Funeral insurance is sold on the basis of a person's age, lifestyle and health. If insurance companies waive or minimize the amount of information required regarding a person's health or medical condition, there must be a safeguard built into the policies to compensate for the possible poor health of an applicant.
Some insurance companies will offer plans that contain a restriction of time and limited death benefits before the full coverage becomes effective. This is particular true if a person doesn't qualify for full coverage due to existing health conditions. The time restriction is generally 18-24 months, depending on the term. The death benefit will be limited to a return in premiums paid, plus an annualized growth grate of 3-4 percent. If the insured dies before the time restriction is up, the insurance may not cover the cost.
For those persons who are in good health and do not qualify for immediate coverage due to ill health, it's best to work with a funeral home with preneed services. In order for the cost to be guaranteed, the policy must be assigned by the purchaser to the funeral home. There are other details for each policy so please make sure you understand every line of your insurance. If you need to bring additional family members to help you understand, we encourage you to do so.
Do not hesitate to investigate an insurance company and the products they offer in relation to funeral insurance. They should be registered with both state and federal governments, check the NAIC (Association of Insurance Commissioners) if a company is a member. Determine whether the company provides protection for its policy holders should it experience financial difficulties.