What is burial insurance?
There is life insurance, health insurance and other insurances, so why would a person require burial insurance? It is because the cost of funeral has taken a quantum leap. Earlier the funerals used to be funded with trusts and money was set aside for a funeral. Although, it is not difficult to form a trust but the tax implications are far greater. As a result, more and more people have turned towards burial insurance policies as a savior. There are supplementary policies available apart from the basic life insurance policies and they provide small coverage limits up to $10,000 for funeral costs.
The funeral cost has gone up and according to the American Association of Retired Persons (AARP), the most expensive purchase made by older people is on funerals. The average cost for adult funerals can range from $4,500 to $5,500. The casket itself costs 1/3rd of this amount while an in-ground burial will cost another $2,400. Hence a $10,000 burial policy may not be able to cover the total funeral costs.
A Funeral is a personal affair and hence funeral preplanning is a personal decision. There are no typical burial insurance plans. Hence you will have to buy the products and services you choose and have a policy written through an insurance agent or a funeral director. So in a way these policies become individualized and you can include almost everything in them unless you have a policy capped at a particular dollar amount.
There is a lot of information that you need to find out before understanding and stating your needs in a burial policy. Here's a checklist of information you need to find out, questions you need to ask and things to do.
Checklist for purchasing a burial insurance:
- Find information first on your state's laws regarding pre-need insurance.
- Before you buy a burial policy, discuss your requirements and options with your family as well as your lawyer so that your decision can be consistent with your estate planning and will.
- You have to determine what is the value of the plan that you will receive in death benefits?
- Before you buy the policy, it is important to verify your agent's or funeral director's license.
- If there are any free look laws available in your state then you need to take advantage of the law as it will help you to review your policy before it gets locked in.
- According to the Federal Trade Commission, you should get a written or printed price list of goods and services available from the funeral homes itself.
- It is not necessary that Funeral directors have to provide price guarantees. It means that the money provided to you today through a burial policy may not be good enough five years later or anytime in the future.
- Never accept unsigned documents and try to have them signed in your presence.
- You need to make sure that the funeral arrangements can be moved from one funeral home to another at any time.
- Last but not least, you need to know what happens if you cancel the policy.