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How Is Funeral Insurance Different from Life Insurance

Anna Johnson Anna Johnson , 5/9/2018
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Life insurance and funeral insurance are two very different products. Although people think they know life insurance and all about it, but they’re actually wrong. There are various types of life insurances and then there are further options in those types that you can opt for according to your needs. On the other hand, funeral insurance is a relatively new concept and many people don’t actually know about it.

Even though life insurance and funeral insurance are related to the same thing – death, both these products offer very different benefits to the insured people. So what are the difference between life and funeral insurance? Let’s discuss some of the basic ones.

1- The Benefits of Life Insurance

All the life insurance policies pay a certain amount of money to the beneficiaries of the policy holder. For instance, if the death benefit of your insurance policy is of $1,000,000 then your family will receive a check for that amount in the event of your death. With life insurance, the beneficiaries are allowed to spend the money they receive for any purpose. This decision is entirely up to them and there are no restrictions on the beneficiaries.

2- The Benefits of Funeral Insurance

Funeral insurance, as the name suggests, is a product that is designed to take care of your final expenses. And by that it means your funeral expenses. That’s why this insurance product is also known as burial insurance as well. The benefits that are derived from this type of insurance policy are used to arrange the funeral of the insured person. It’s like a prepaid funeral arrangement. However, if the amount of the benefit is enough to cover the funeral expenses and a few other liabilities, then it’s up to the beneficiaries if they want to spend the remaining amount of the payout to settle any outstanding debts or not. 

3- Options in Life Insurance

Life insurance has various options to choose from. If you want, you can go for permanent life insurance and you can also go for temporary life insurance. Whole or permanent life insurance is a product that’s designed to be a lifetime policy. On the other hand, term or temporary life insurance only covers the insured person for a particular amount of time. The insured person can buy a temporary policy, live through that term and convert it into permanent one at some point.

4- Options in Funeral Insurance

Funeral insurance is different from some types of life insurance because it does not expire. It remains valid until you die provided that you had been paying monthly premiums on time. Moreover, the only time it pays you anything is at the time of your death. On contrary, life insurance policy can be cashed at any time you want. For more options available in funeral insurance, you can contact Freedom Insurance.

It’s also good to know the various pros and cons of life and funeral insurances to judge which one of these two insurances would suit your needs and budget.

All in all, even though the purposes of these two insurances are different, learning about the options available in their various policies always helps shape up your final decision.