Many people buy life insurance simply to cover their burial and funeral expenses. Did you know there are a variety of burial insurance policies available that are quite different from each other? Before you buy one of these funeral insurance policies, make sure you’re getting what you really need.

When it comes to life and death, most of us try to avoid talking and thinking too much about the later. However, when it comes to protecting yourself in both life and death, you better bet that there’s an insurance policy for both.

Akin to life insurance, burial and funeral insurance allow you to prepay for end of life expenses in the event of your death. For example, both can be used towards a number of funeral services and merchandise (i.e., casket, urn, burial vault, grave liner, cremation, embalming, cemetery plot costs, obituaries, funeral home service, flowers, hearse, reception costs). Although there are some key differences between burial insurance and funeral insurance, both types of insurance are considered funeral expenses as part of a life insurance policy.

Let’s discuss the key differences between preneed funeral and burial insurance:

Funeral insurance

While both burial and preneed funeral insurance are designed for the policy holder to prefund their funeral funds prior to death, there are some extensions to preneed funeral insurance that burial insurance does not cover, for instance:

• Preneed funeral insurance is offered by most insurance providers as a “term life policy”.

• This policy is paid in full and then remains in effect the policy holder’s death.

• This means at the point of death, rather than paying out funds set aside to a beneficiary, the funds are paid directly to the funeral service provider (i.e., specific funeral home) of the policy holder’s choice, stated in the policy as an “assignee”.

• Preneed funeral insurance is meant to protect loved ones from shouldering the financial burden of a funeral and associated costs.

• Funeral insurance also takes stress and guesswork off your family as it allows the policy holder to predetermined their funeral by choosing exact end of life services and paying for them in full (i.e., church, burial services, cremation services, reception costs, headstone, coffin or urn, etc.).

Burial insurance

Burial insurance is also considered an end of life insurance policy meant to pay ahead for the cost of the policy holder’s end of life plans and services.  The aim of burial insurance is to prepay the pricy cost of end of life in this manner:

• Burial insurance policies often differ between insurance providers. For instance, they can be offered as a “whole life policy” or a “term policy”.

• As opposed to funeral insurance, burial insurance doesn’t always cover end of life services as outlined by the policy-holder upon their death.

• Unlike preneed funeral insurance, burial insurance names a beneficiary and pays out the death benefit directly to this individual.

• This leaves funeral services up to the beneficiary who can choose to delegate the money as they wish (i.e., burial or funeral services and merchandise, in addition to outstanding medical costs, legal costs, etc.).

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