When purchasing life insurance, there are several important decisions that need to be made. Certainly, the amount of insurance protection is one of the main criteria. Having enough money to ensure that your loved ones and survivors are financially able to carry on in the future is essential.
The type of life insurance that you purchase is also a primary decision. There are two main forms of coverage to choose from. These are term and permanent. Within those types, however, are a number of different niches through which policyholders can choose to pinpoint the purpose for their coverage.
For example, many individuals will purchase burial insurance. This type of life insurance, also often referred to as funeral insurance or final expense coverage, is typically obtained for the purpose of providing one’s survivors with cash so that funeral and other related expenses can be paid.
Today, the cost of a funeral and other surrounding costs can easily exceed $10,000 in many areas. This is particularly the case when you factor in items such as a headstone, a burial plot, flowers, and the decedent’s memorial service. Even less costly services such as cremation can also run into the several thousands of dollars.
Unfortunately, many families today do not have this type of money on hand to pay the service providers – although oftentimes, payment is due immediately. With this in mind, having burial insurance can relieve those whom you love from an additional financial burden, at an already difficult time in their lives.
How Burial Insurance Works
Many burial insurance policies will provide benefits of between $5,000 and $25,000. However, there are some insurance carriers that offer policies with higher amounts of coverage. In many cases, burial insurance is offered as permanent life insurance coverage. This means that the policyholder has death benefit protection, along with a cash value component.
The cash that is inside of the policy is allowed to grow on a tax deferred basis. This means that there will be no income tax that is due on the growth of this cash until the time that it is withdrawn – which could essentially be many years down the road – allowing it to grow and compound exponentially.
This cash could be either withdrawn or borrowed by the burial insurance policyholder for any number of reasons, including to pay off debts, to pay for a child’s or a grandchild’s college tuition, or even to take a vacation.
The borrowed or withdrawn cash does not have to be repaid. It is, however, important to note that if there is an unpaid balance at the time of the insured’s death, the amount that is not repaid will be charged against the death benefit proceeds that are paid out to the beneficiary (or beneficiaries). So, if beneficiaries are counting on a certain amount of death benefit proceeds, it may be essential to repay any cash value that is borrowed or withdrawn from the policy.
Choosing a Burial Insurance Beneficiary
Just as with other types of life insurance coverage, you will need to choose a beneficiary when you purchase a burial insurance policy. A beneficiary is a person (or entity) that will receive the proceeds of the insurance policy upon the death of the insured.
When choosing a beneficiary, it will be important to keep in mind that this individual will likely be the one who is responsible for making the funeral arrangements – and for paying the expenses – of the insured. Therefore, when determining who the best beneficiary should be, it is likely that the person should be someone who is responsible, dependable, and close to the insured individual.
Often, an insured will choose a son or daughter, niece or nephew, or even a grandchild as their beneficiary of choice on their burial insurance policy. In other cases, an individual may choose a spouse or a significant other. Also like with other types of life insurance, more than one beneficiary may be named.
Should an unexpected event occur and the beneficiary predecease the insured, it will also be important to have a secondary beneficiary named. This person (or persons) will be able to receive the proceeds of the burial insurance policy and take on the duties of the initial beneficiary.
When naming beneficiaries in order as such, the first beneficiary is known as the primary beneficiary, and the beneficiary (or beneficiaries) that is next in line is known as the secondary beneficiary. You could even name a beneficiary that is third in line, should something happen to the secondary beneficiary. This person (or persons) would be known as the tertiary beneficiary.
When a beneficiary receives the proceeds of a burial insurance policy, these funds are received income tax-free. This means that the beneficiary can use 100 percent of the proceeds for paying expenses. This can be truly helpful – especially if the insured had a great deal of debt to be paid.
In many cases, an insured may have unexpected – and uninsured – medical expenses that are in addition to his or her funeral-related costs. The proceeds that come from a burial insurance policy can be an ideal way to pay off these debts.
Other Factors to Consider
In addition to the type of coverage, the amount of protection, and the named beneficiary, there are other important factors to consider when purchasing a burial insurance policy. One key criterion is the stability of the underlying insurance carrier through which the policy is being purchased.
There are many insurance carriers out in the marketplace – and some these carriers offer burial insurance. The one that you purchase your policy through should be strong and stable financially – and it should have a good reputation for paying out claims to its policyholders.
While past dealings are not a guarantee of future performance, it can still be a good indication that an insurer is a stable carrier. Therefore, it will be important to review the insurance company ratings that are provided by the rating agencies such as Standard & Poor’s, Moody’s, Fitch Ratings, A.M. Best, and TheStreet.com. Typically, information regarding an insurance company’s financial ratings can be found directly on the insurance company’s website, as well as on your state’s Department of Insurance website.
You may also want to review an insurance company’s information about any Better Business Bureau data. Many insurers are accredited with the BBB. Also, the BBB assigns ratings to companies from A+ to F, similar to a school report card. The BBB also provides information regarding complaints that have been filed with a company.
How and Where to Obtain Quotes
If you are looking for burial insurance policy premium quotes to ensure that your loved ones won’t be left with any final expenses debt, it is usually best to work with an agency that has access to more than just one life insurance carrier. This is because when you do so, you can more directly compare, in an unbiased manner, multiple insurers’ policies, benefits, and premium rates – and then you can decide from there which one will be the best for you and your specific needs.
When you are ready to start the burial insurance policy and premium comparison process, we can help. We work with many of the top rated life insurance carriers in the marketplace today, and we can help you to obtain all of the pertinent details that you need in order to make a more informed purchase decision. We can do this for you quickly, easily, and conveniently – all from your home computer – and without the need to meet in person with a life insurance agent. If you are ready to begin, just fill out the quote form on this page..
Should you discover more questions through the process regarding the best way of choosing a beneficiary for a burial insurance policy – or even if you have questions about life insurance in general – our experts are here to assist you. We can help you in narrowing down what type of coverage is best for you, as well as the amount of protection that will help in providing those whom you love with the proper financial supplement. Our experts can also help you in deciphering that of the many life insurance carriers may be the best for you and your life insurance coverage budget. We can be reached toll-free, by calling 877-235-9299.
We understand that the purchase of burial insurance may seem a bit confusing. There are many variables to be aware of – and you want to ensure that you have all of the essential information in place prior to moving forward with your purchase decision. That’s why having an expert on your side can help to make the process go more smoothly. Please contact us today – we are here to assist you.