Burial Insurance vs. Life Insurance: What’s the Difference – Understanding what the difference between burial insurance and life insurance will assist you in deciding the right kind of coverage. Most policyholders are aware of the different kinds of insurance that they can get for themselves. When choosing between burial, life, or both insurances, it’s crucial to choose the one that best suits your family’s needs in case of your death.
However, you and your family’s needs can determine the answer. For this reason, it’s important to understand what’s the difference between burial and life insurance, which can help you make the right decision. In this article, let’s review what’s the difference between burial insurance and life insurance while assessing their long-term objectives and financial status.
What is Burial Insurance?
Burial insurance covers the costs of a person’s funeral and burial. This coverage is occasionally referred to as funeral expenses or funeral insurance. Unlike regular life insurance, burial insurance provides a smaller policy with a lower death payout.
Moreover, the main objective of this coverage is to provide funds to pay for expenses related to the funeral. These expenses include a coffin, burial plot, funeral ceremony, and other charges. Furthermore, it also reduces the financial responsibilities of the dead’s family or loved ones.
What is Life Insurance?
Life insurance guarantees a death benefit to named beneficiaries, securing their financial well-being. The main objective of life insurance is to protect and support the beneficiaries and dependents financially when the policyholder has died.
In addition, this coverage differs in terms of coverage amount, term length, and type. Moreover, it offers alternatives for term insurance (which offers coverage for a fixed period) or whole life insurance (which offers coverage for the policyholder’s entire life).
Burial Insurance vs. Life Insurance: What’s the Difference?
There are a lot of similarities between burial insurance and life insurance. Both coverage enable you to pay the regular premium and also offer your family a settlement when you die. Additionally, this coverage can assist in reducing some potential financial responsibilities after you die.
However, burial insurance and life insurance differ significantly in terms of requirements, coverage amounts, and payment purposes. Furthermore, knowing what the difference between burial vs. life insurance is allows you to make the best decision for your family.
Requirements
Generally, any adult who meets the age minimum for coverage is eligible to apply for burial insurance. It provides coverage for you, your spouse, and additional adult family members, such as your parents. Life insurance criteria consider multiple individual factors, including age, medical history, smoking record, lifestyle, and current health status. These characteristics influence both your ability to receive life insurance and the cost of your premiums.
Coverage Amount
Burial insurance offers a maximum coverage amount of $15,000. This can be used to recompense debts or other payments instantly after your death and to cover funeral expenses. Meanwhile, you will be covered for a significant amount with life insurance rather than burial insurance. This is because life insurance is made to lessen all or part of the income you provide for your family.
Purpose of Payment
If you need to budget for the expense of your burial but do not mandate continuous assistance from anyone, you may want to consider getting burial insurance. In addition, if you are not married and do not require income replacement, consider purchasing funeral insurance.
However, you may choose to buy life insurance to ensure the long-term financial security of dependents such as spouses, children, or other family members who rely on your income. Moreover, if you have continuous debts that your family will require to pay off after you die, like a mortgage, getting this coverage may also be an excellent choice.
Who Needs Burial Insurance
While not every individual requires final expense coverage, there are a few situations in which getting burial life insurance is a reasonable option:
- You don’t have enough money to pay for your funeral.
- Although insurance is in place, it is inadequate to pay burial expenses.
- You want to give someone special a small sum of money as a gift.
- You want to pay modest debts such as credit card bills and auto loans.
Certain insurance providers may claim that their product is essential for all, but that statement is untrue. This kind of coverage is purchased by those who want to make sure their loved ones aren’t left to bear the financial responsibilities of unpaid funeral costs.
Which Coverage Is Right for You
Burial insurance specifically pays for expenses related to the funeral, while life insurance offers wider financial coverage to beneficiaries. To choose the most suitable coverage, it’s crucial to thoroughly examine the terms, coverage, and conditions of each plan. Furthermore, a financial counselor or insurance expert can help you make informed decisions based on your needs and assets.