Burial Insurance – A Definition of Burial Insurance
Traditionally, funerals were paid for by family members who pooled their money together to pay for a loved ones funeral expenses. Usually an elderly grandmother had some pin money that she could put towards the cost of a funeral or other expense. Some single uncles or aunts usually came up with a significant contribution for a funeral. But over time this system became no longer adequate because the costs of a funeral escalated. Funeral homes were required to buy liability insurance in order to protect themselves against potential lawsuits. Burial insurance can help protect your loved ones so that they will not have to try to pay for a funeral when you die.
When you purchase a burial insurance policy, you are normally buying a policy that is guaranteed for a set number of years. The policy premiums will remain the same as long as the policy is in force. The value of this type of insurance policy can vary from approximately ,000 dollars to as much as ,000 dollars. When you are trying to decide how much coverage you should buy, you might want to think about your monthly budget. Because you will be making the payments over the course of several years, you should make sure that you can afford the monthly payments.
You will be asked to name one beneficiary on your burial insurance policy. This person will be responsible for requesting a payout on the policy in the event of your death. Your beneficiary will be the sole recipient of the payout on the policy. The beneficiary will receive a check made payable to him. He will have to decide how to use the money. When he receives the payout on the policy, he should pay the funeral home first. Think carefully about whom your beneficiary should be if you are not married.
At the end of the term, your burial insurance policy will be up for renewal. Your rates will most likely increase when the policy is renewed, so be prepared to pay a higher monthly premium. It is best to select the longest term available when you are initially buying your policy. After you buy the policy, keep copies of the policy in a filing cabinet or other safe place. You may want to consider putting the policy in a safe deposit box at a local bank. If you decide to do this, make sure that the beneficiary has access to the safe deposit box.