Does Life Insurance Cover Funeral Costs?

Death.  It is something that eventually comes for all of us.  Whether young or old, rich or poor, we all will eventually find ourselves slipping out of this life.  Believe me, this concept doesn’t excite me any more than it does you.  However, as we consider our inescapable mortality, we need to make sure that we are seeing the big picture: there’s a lot more at stake than just our own selves.

The last thing that any of us want to do when we kick the bucket is leave our loved ones with massive debts, such as a mortgage, college tuition, or basic living expenses.  Covering these types of expenses is the main idea behind life insurance.  But, there is one expense (and typically a large one) that we often fail to consider: funeral costs.  An average funeral in the United States can cost between $7,000 to $10,000.  Adding this to the expenses mentioned earlier could end up being catastrophic to your family’s finances.

Source: http://www.usurnsonline.com/funeral-resources/10-interesting-funeral-infographics/

Luckily, life insurance does exist, and it can indeed cover funeral costs.  In general, the way that life insurance works is like this: When a policy is issued, the policy owner chooses someone to be the beneficiary of the policy.  When the insured person passes away, this beneficiary submits a claim to the insurance company, and the insurance company pays them the proceeds.  From this point on, the beneficiary is free to use the funds as they deem appropriate, including for funeral expenses.

With this being the case, the real question becomes this: “Do i have enough coverage to pay for my funeral expenses?”.  It’s a little too common for beneficiaries to find out after the fact that the life insurance policy doesn’t cover everything that is needed or was planned for.  Without careful planning, there may be out-of-pocket expenses loved ones could get stuck with.  I would definitely encourage everyone with a life insurance policy to plan out their funeral beforehand with a funeral director.  Make sure you understand the specific costs of the services you want, and plan your life insurance policy with that in mind.  Some funeral homes will even allow you to assign them as the beneficiaries of a policy.  This way, the benefit is paid directly to them and you don’t even need to get involved during a difficult time.

To many of us, life insurance may seem quite expensive and perhaps not worth paying the premiums to later receive the promised payout.  While I would disagree with such a thought, I can understand larger premiums taking a toll on a family’s livelihood.  Insurance companies are aware of this, and many have created what is referred to as a Final Expense policy, where the benefits are designed to cover funeral costs and premiums are generally quite lower.  Sentinel Security Life offers such policies under our “New Vantage” life insurance products.  If this fits your needs more than having larger and more expensive coverage, seek out a Sentinel agent near you.

Life insurance is a great and powerful tool that can save families a lot of grief and headaches during a time that should be spent on more important matters.  Combined with a little bit of planning and thinking ahead, you can have all funeral costs taken care of and only concern yourself with making sure your policy stays current so it can be utilized when the time comes.  We all want to take care of our loved ones while we are on this earth.  Make sure that you are continuing to care for them even after you’re gone.  Use life insurance.  I promise you it’ll make a hard situation a little bit better.

Blog written by: Andrew Jordan, Creative Marketing Specialist II for Sentinel Security Life Insurance Co.

“Too Young” for Life Insurance?

For many people, life insurance is only important when you get “old.” I used to believe that, until I realized that seemingly solid finances can take a sharp turn at any moment. The sudden death of your spouse will definitely sting on every emotional level, but what happens to the household finances when that happens? Many young couples and families become financially crippled due to the lack of planning.

After her husband was hit while riding his bicycle and later died from his injuries, Chanel Reynolds said, “I was finding it really hard for me to stay present and in the room and to be able to hear what the doctors were saying because I was so overwhelmed with not knowing how much money we had in our checking account, and the fact that we had our wills drafted but not signed.” She also added that she was unsure of whether she was going to be able to care for a family by herself. Although not a large policy, Ms. Reynolds was saved from financial ruin because of life insurance.

It is not surprising that Ms. Reynolds’ quality of life was preserved due to a life insurance policy. The typical coverage amount for a policy is often determined by either the net worth or a multiple of the annual income generated by the applying for the policy. With the income from her husband’s policy, Ms. Reynolds was able to gain some time in order to figure out their mortgage situation along with other bills, keep her son in the same school, and give her time to look for secure employment.

Aside from crises, there are other benefits to buying a life insurance policy while you are young. You are able to open up more options in payment type, which can provide you with lower premiums or even shorten the amount of time that you would have to pay those premiums. Since health risks do commonly increase with age, life insurance policies generally get more expensive to purchase down the road. Life insurance policies can also be another way of saving for retirement, especially if other options are not available to you. Tax-deferred strategies are really popular among other savings vehicles, and life insurance policies provide this as well.

Whether this is all new to you or you are seasoned in life insurance, make sure to do some research on your own. A great place to start is with the nonprofit Life and Health Insurance Foundation for America. You are never too young to begin thinking about your future. You are never too young to begin planning.

For more information visit www.sslco.com or call us at 800-247-1423.

Blog written by: Thy Mims, Marketing Communications Manager for Sentinel Security Life Insurance Co.

*Sources
[1] Lieber, Ron. “YOUR MONEY; A Shocking Death, a Financial Lesson and Help for Others.” The New York Times, 12 Jan. 2013. Web.
[2] “Why Single People Need Life Insurance Too.” DailyFinance.com. N.p., n.d. Web.
[3] “You’re Never Too Young for Life Insurance.” – MSN Money UK. N.p., n.d. Web.
[4] “You’re Not Too Young for Life Insurance.” Insurance and Health Care. N.p., n.d. Web.