Insurance is a necessity in modern life. The right insurance policies protect you and your family financially in the event that something happens. Insurance companies are able to leverage the powers of statistics and group buying power to collectively spread risk across a pool of customers. The benefit is that all these customers get to enjoy affordable protections in the event that certain things happen. You need several kinds of insurance in order to be totally safe. However, you might also need life insurance and funeral insurance, but are they actually different?
The Difference Between Life and Funeral Insurance
Life insurance is something that most adults should have. If you have dependents or a spouse, then you definitely need it. This kind of insurance is designed to make sure that the financial needs of your survivors are taken care of in the event of your passing away. Life insurance might be one huge payout, or it could be a series of payments as stable income for a while. It all depends on the policy. The amount of coverage you get and how much it will cost you are likely to depend on your health status and how old you are.
Funeral insurance is a little bit different. It might also be known as burial insurance or final expense insurance. It’s actually a form of life insurance, but it serves a much narrower purpose. It won’t protect your family financially in terms of replacing your income, but it should cover any expenses involved with your final remains and any ceremony held in your memorial. This is the kind of insurance you might use to pay companies like Cosmopolitan Funeral Services for arranging a service where friends and family can have their chance to say goodbye to you when you are gone.
Even though funeral insurance is a form of life insurance, you need to remember that its scope of it is very narrow. It’s designed to cover the final expenses of dealing with someone’s remains and a memorial service in their honor. A surviving parent or spouse can’t rely on it for income replacement, nor can they use it to put any kids through college or university. It’s also very possible for funeral insurance to come up short. The costs involved with a funeral and either burial or cremation can be pretty high. If the policy isn’t big enough, some expenses might still have to be paid.
When determining your insurance needs and coverage, be sure that you account for both kinds of insurance. While both are technically in the life insurance category, you need a specific policy to cover burial expenses or cremation and you also need a broader policy to protect your family and surviving dependents financially from any income that you wouldn’t be providing them with anymore.
Hopefully, it will be many years before either policy would be necessary. However, life insurance can give you peace of mind now that your family will be protected, and funeral insurance will spare them coping with burial bills while grieving.