Usually when you reach the age of 60 and retire from work, you come more close to your family as you get more quality time to spend with them. At this age you would definitely not want to be a financial burden on your family. It is this thought that triggers the idea of getting funeral insurance done.
A funeral can cost anything between $4000 for a simple cremation to $14000 for an elaborate burial, flowers and casket. The cost of a funeral also depends on the cultural expectations. A sudden death and an unexpected funeral can be difficult to manage for friends or family. Making provision for your own funeral helps them to overcome the loss and lessens the monetary burden. This is also a good option for older people who do not have many assets to leave behind for their family. It is also an attractive option for the low or fixed income group, who cannot afford to pay a lump sum amount but can invest in small premium payments.
Funeral insurance is very alike personal insurance policies. The sum assured ranges in between $3000 to $ 50000. But the most common amount chosen is mostly within $5000 – $15000. Your maximum age for this policy can be 80 years down to 55 years. This policy would cease if you reach the age of 90 or if you meet the desired amount of the cover. The premiums can be paid either monthly or fortnightly depending on the amount of cover. You get the full benefits of the policy until death.
Like every insurance policy, even this one has certain pros and cons attached to it.
The Pros are:-
- There are no blood tests, health questions or medicals involved with the application of funeral insurance policy.
- Once you have signed the contract, you would get a 30 days cooling off period.
- If you have an accidental death, you would get full benefits of the policy even if this accident happens in the initial 12 months of acquiring the policy.
- You can opt for this policy when you can’t avail a life insurance at a later stage of your life because of the age bar.
- You can cap the premiums with some other policies as well.
- Some of these policies also allow a 3 months relief from the premium payments, if you have a financial crunch.
The Cons are:-
- The premiums might increase with time according to your age and the CPI Index.
- If you take this policy at mid age and tend to live for longer years, you might end up paying more premiums than you would have, if you had saved the same amount of money for that long.
- If due to some reasons you discontinue your premium payments, you would lose both the amount of your cover and the premiums paid till date.
- If you get a natural death in the initial 12 months of your policy you may not get the full benefits of the policy. You would only receive the amount paid for the premiums so far.
- Sometimes it may also take a while to get the insurance pay-out.
Funeral Insurance is a good way for many people who wish to evade the legacy of debt.
Jen Godin is a freelance blogger and currently writes for Let’s Insure which provides funeral cover in Australia. Visit http://www.letsinsure.com.au/OurInsurance/Funeral for more information on family funeral policies.