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Funeral Insurance?

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When I wrote about doubling up on our life insurance last week, a reader emailed me asking about funeral insurance. I had never heard of the term. I figured he was simply talking about life insurance. Then he directed me to visit APIA for funeral plans. I did a little research and it seems like it is better known as burial insurance here. Tomato, tomahto... funeral insurance (or burial insurance) exists... I guess I learn something new every day.


So what's the difference between funeral and life insurance? I headed to Google to research the two. The biggest difference is probably the most obvious one, funeral insurance is more specialized. Funeral insurance will pay for a funeral, but you life insurance money can be used for anything. Why would you want the more specialized funeral insurance instead life insurance? There's one main advantage. Often there are no exams, making it easier to get insured. This is key for those who who may be in less than perfect health.

Why wouldn't you get funeral insurance? It can be much more expensive than life insurance. For that reason alone, it is often worth at least trying to get life insurance first. Also though you may escape the exam, if you disclose a health problem, you can be rejected.

Given my (knock on wood) good health, it seems like I'm doing the right thing sticking with life insurance. That said, my term life insurance is going to expire in 20 years. After that I'll have to look into funding my funeral from my own savings. If I'm super-rich, I'll opt to be frozen next to Ted Williams. If it's good enough for the Splendid Splinter it is good enough for me.

If I'm not super-rich, I'll probably go the cremation route. It may sound silly, but it's kind of irked me that if we keep burying people cemeteries will have to continue to expand as long as there's a human race. Unfortunately we don't have infinite real estate... so it is unsustainable.

The other reason to go the cremation route is that it is cheaper, which leaves more money around my heirs. It turns out that caskets and headstones are expensive... and I won't be alive to appreciate it.

Last updated on January 12, 2015.

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2 Responses to “Funeral Insurance?”

  1. Kathy says:

    If you have sufficient life insurance or other assets, funeral insurance shouldn’t be necessary. I see this as a gimmick to entice poorer people to buy this out of fear.

  2. Steve says:

    A funeral/burial/etc is one expense that is almost guaranteed. Thus, it would be a better choice (on average) to just save up the premiums in an account that your heirs can use to pay for the funeral.

    I’m with you, LM – cremation in a plain cardboard casket. I’m not going to notice anything fancier. Though, that said, a funeral is more for the survivors than the decedent.

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