Difference Between Funeral Insurance and Life Insurance


When it comes to discerning between the various types of insurance that are available today, most consumers are easily overwhelmed. It doesn’t help that some unscrupulous insurance agents who do not have the consumer’s best interest in mind will often up-sell them way more coverage than they need. It’s very easy to end up paying exponentially more than you expected to for coverage you may not even need, want or ever even use.
One common topic of confusion is funeral insurance versus life insurance. The popular misconception is that they are basically the same thing. However, this is not the case. Life insurance policies are worth far more than funeral insurance policies and can range into the millions of dollars in benefits. The premiums are exponentially higher and there is a rigorous qualification process that includes a medical exam. Life insurance benefits are intended to pay for funeral expenses, too – but they are also intended to pay for other debts incurred by the deceased and provide for living expenses and other necessities for the surviving family. Most people do use a portion of life insurance benefits to cover burial expenses so a separate funeral insurance policy wouldn’t be necessary, assuming the life insurance benefits were substantial.
Funeral insurance policies are intended to cover funeral expenses only. That is the only thing the benefits can be used for. Funeral insurance does not allow for any other monetary compensation or support to surviving family members outside of providing the assurance that all expenses related to the funeral and burial will be taken care of. Generally speaking, funeral insurance polices typically range in  value from $10,000 to $15,000. Considering the cost of an average funeral and all associated costs is $7,000+, you can see that a funeral insurance policy is meant to cover just those expenses and only those expenses.
Funeral insurance can be purchased in a few different ways. First, it can be purchased in a pre-planned form where a funeral and all the associated arrangements are paid for in advance so that when a person dies, there is nothing for the family to be left to deal with. This kind of funeral insurance is usually contracted through funeral homes or mortuaries themselves. The other kind of funeral insurance is more like a life insurance policy because it is paid in monthly premiums and is awarded to a sole beneficiary. For funeral purposes, sometimes family decide to make a funeral home or mortuary the beneficiary on a funeral insurance policy so that everything can be handled by them. However, those who wish that a family member be the sole beneficiary on a funeral insurance policy certainly have that option as well. Also check this blogpost on differene between funeral insurance and pre-paid funeral plan by PINNACLE LIFE.
If you do not currently have a life insurance policy, but want to be sure that your burial expenses are taken care of, you should definitely look into purchasing a funeral insurance policy. There are few, if any, qualifications required in order to purchase funeral insurance and the monthly premiums can be as low as a few dollars per $1,000 of coverage.


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