If you want to make sure you leave money to pay final expenses, you may be most interested in life insurance products with a death benefit. All life insurance has this feature in a range of amounts, depending on the value of the policy.
What is a death benefit?
A death benefit gives your loved ones money – typically, tax-free – that they may use to pay your final expenses in the event of your death. This benefit is often referred to as ‘burial insurance’ or ‘funeral insurance.’ However, it is typically a feature in whole life insurance coverage rather than a separate offering.
How does burial insurance work?
Burial insurance covers the cost of your funeral and/or cremation expenses after you pass away. It can also be used at the beneficiary’s discretion to pay off debts including any medical bills, mortgage loans, or credit card bills. Similar to burial insurance, preneed funeral insurance covers any funeral expenses, but is usually paid directly to a funeral home rather than any family members.
If the cost of premiums is a concern, you may want to look at coverage that is designed for low cost, while still providing a death benefit that may be sufficient to cover the final expenses your family will face after you're gone. A death benefit can also pay for other stressful obligations like hospital and doctor bills, as well as estate settlement costs.
Talk to your insurance professional about using life insurance to cover your funeral costs and other final expenses or take a look here to see how much life insurance you need.