Why Purchase Funeral Insurance?
After suffering the loss of a loved one, funeral arrangements are considered to be the right way for families to send a loved one away from this world. Funerals can cost as less as a few hundred dollars to $35,000 or more depending on the type of arrangements made. Paying for these expenses without taking help from an insurer can be a hard task especially for young adults, elderly parents or unemployed people.
What is Funeral Insurance?
Funeral expenses plan is an affordable type of life insurance plan that offers 1 lump sum compensation payment to the beneficiaries of the deceased when they file a claim. The money given by the insurer to the beneficiaries is meant to help the family pay for funeral expenses for the deceased policy holder.
People usually purchase funeral expenses plans to ensure that their families have enough money to pay for funeral arrangements and that their families do not have to dip into their savings or borrow money for funeral expenses. Although this type of insurance plan cannot be considered as an investment into your future, this type of insurance plan can prevent your family from having financial problems when they are already suffering the loss of a loved one.
Funeral expenses plans are considered a must for those people who have dependants or those individuals who want to ensure that their families have money for proper funeral arrangements.
Is Funeral Insurance the Same as Life Insurance?
No, life insurance pays a large lump sum payment to the beneficiaries of the deceased once their claim is accepted. Life insurance plans may offer a compensation payment that may be as less as $100,000 or as much as $500,000.
Some insurers may also offer larger compensation payments to the beneficiaries of policy holders who have opted for higher compensation payments and better life insurance plans. Funeral expenses insurance on the other hand, is an additional plan sold along with life insurance, income insurance or total and permanent disability plans. Funeral expenses insurance plans pay a limit one time lump sum payment to the listed beneficiaries and this lump sum payment may range from $5,000 to $35,000 or in some cases $50,000.
The amount of insurance purchased along with terms of the plan will determine the final compensation payment given for funeral expenses insurance plans.
Do I Need Funeral Insurance if I have TPD Insurance or Income Protection?
Yes, if you want to be fully protected and want to protect your family financially even when you are not there physically to take care of them then, you need funeral expenses insurance plans if you have TPD or income protection plans.
Since these plans are affordable especially when purchased online through insurance comparison websites or insurance agents; buyers can opt for good plans well within their financial means. It should be noted that some plans may have an extended waiting period to help buyers understand all the terms of the plan in detail.
Buyers may be allowed to return the policy during this period without having to pay a penalty; however buyers who opt for a longer waiting period willingly should know that doing so will also delay when their policy comes into effect since claims can only be filed once the waiting period of the funeral expenses insurance plan is over.
5 Things You Must Know About Funeral Expenses Insurance Plans
- The waiting period of these plans can range from 15 days – 90 days. In some cases a waiting period of 120 days may be offered to the policy holder. A longer waiting period will bring down the premiums of the selected plan by 10% – 30% however; a longer waiting period will also prevent you from filing a claim until this waiting period is over.
- A benefit period is not applicable for funeral expenses insurance plans which means that once the policy comes into effect after the waiting period is over the policy holder ‘s beneficiaries can file a claim until the policy is active. Failure to make premium payments on time, refusing to disclose information that is required to process claims or hiding information from the insurer can lead to rejected claims. Claims can only be filed after the policy holder passes away, within a certain number of days after the death of the policy holder and while the policy is still active.
- Policy holders can choose a short term plan for 5 years or 10 years or a long term plan for 15 years, 20 years or more.
- Although buyers who have pre-existing health conditions such as but not limited to diabetes and cardiac problems are allowed to purchase these plans, such buyers may have to pay higher premiums to get maximum financial protection for their families. If you smoke, have a stressful or dangerous job and are overweight, then the insurer may charge you higher premiums as well.
- To help policy holders pay funeral insurance premiums on time, insurers in Australia offer a few easy premium payment options. Two of the premium payment plans that are offered to new and existing buyers are the stepped premium payment plan and the levelled premium payment plan. While both these plans are very different from each other, both these plans are beneficial in their own way. Levelled payment plans allow policy holders with long term policies to pay an equated amount towards premiums every month or year over a period of time. Stepped payment plans allow policy holders with short term policies to pay varying amounts of premiums every month or year over a period of time. Usually buyers who opt for stepped payment plans are asked to pay small amounts towards premiums in the beginning and as the policy holder grows older he is required to pay higher premiums. Stepped premium plans are ideal for people who have just got a new job, need time to stabilise financially and do not mind paying higher premiums as they mature.