When it comes to life insurance, there are two main types: life insurance and burial insurance. Many people don’t know the difference between the two and end up buying the wrong policy. In this blog post, we will discuss the 10 key differences between life insurance and burial insurance. We will also explain which policy is right for you. So, let’s get started!
The first difference between life insurance and burial insurance is the purpose of the policy. Life insurance is meant to provide financial protection for your loved ones in the event of your death. On the other hand, burial insurance is specifically designed to cover funeral costs.
Life insurance also has different coverage options than burial insurance. For example, you can choose to have term life insurance or whole life insurance. With term life insurance, you are only covered for a set period (usually 20 or 30 years). With whole life insurance, you are covered for your entire life.
Burial insurance, on the other hand, is only offered as whole life insurance. This means that you are covered for your entire life and do not have to worry about the policy lapsing.
Another difference is that life insurance usually requires a medical exam, while burial insurance does not. This is because life insurance pays out a death benefit, which is based on your life expectancy. Burial insurance, on the other hand, only pays out a funeral benefit and does not take into account your life expectancy.
Life insurance policies can be canceled at any time, whereas funeral insurance policies cannot be canceled. This is because burial insurance is designed to cover funeral costs, which are typically incurred shortly after death.
The coverage amount is another key difference. Life insurance policies typically have much higher coverage amounts than burial insurance policies. This is because life insurance pays out a death benefit, which can be used for anything, whereas burial insurance only pays out a funeral benefit.
Another key difference is that life insurance policies can be more expensive than burial insurance policies. This is because life insurance provides more coverage and protection than funeral insurance.
However, it is important to remember that the cost of life insurance varies depending on several factors, such as your age, health, and smoking status. So, while life insurance may be more expensive overall, there are ways to get cheaper life insurance rates.
Burial insurance, on the other hand, is a non-renewable policy. This means that once you purchase the policy, it cannot be renewed.
Life insurance policies are renewable, which means that you can renew your policy at the end of the term. This is not the case with burial insurance, which is a non-renewable policy.
Another difference between life insurance and funeral insurance is that life insurance policies typically have a cash value, while burial insurance policies do not. Cash value life insurance policies have an investment component that grows over time. This money can be accessed through loans or withdrawals.
Burial insurance policies do not have a cash value because they are designed to cover funeral costs, which are typically incurred shortly after death.
It’s also important to note that both life insurance and funeral insurance have exclusions. For example, life insurance will not cover you if you die of a pre-existing medical condition or if you commit suicide. Burial insurance will not cover you if you die of a pre-existing medical condition or if your death is caused by an act of war.
Riders are additional coverage that can be added to life insurance policies. Riders can provide coverage for things like accidents, critical illnesses, and long-term care.
Burial insurance policies do not have riders because they are designed to cover funeral costs, which are typically incurred shortly after death.
So, there you have it! These are the ten key differences between life insurance and burial insurance. Now that you know the difference, you can make an informed decision about which policy is right for you. Thanks for reading!