For many, death can be a terrible thing to consider. The idea of the ultimate demise of your existence can depress some and people find it easier just not to think about it.
However, that should not stop one from being prepared for the end, just as wise people prepare for any other natural disaster. Sickness, injury, financial problems, accidents and death are a natural part of life and being prepared can help you and your loved ones cope much better with the fallout of such hardships.
Buying Funeral Insurance
Given the rising costs of funeral service a lot of smart people have started looking into getting funeral insurance. It is not uncommon for funeral services to end up in thousands of dollars. An average funeral cost in Australia is estimated to be over $7,000.
The funeral insurance policy is a special type of insurance that covers the cost of the funeral. It is much cheaper than life insurance as it only covers the cost of one expense and guarantees a decent funeral.
In order to estimate how much it would cost and whether you should get funeral coverage, you need to make a budget and assess your finances.
Make a Budget
To determine how much coverage you should buy, you first need to estimate your final expenses. Final expenses include your medical bills, legal costs, credit card bills and loan repayments.
Once you have determined your final expenses, calculate if you will leave behind enough money to cover the funeral costs. Funeral services expect money to be paid in cash, and it is possible that your money will be tied up in long-term fixed assets.
If you believe that you may not have enough liquid cash assets left over after paying your short-term liabilities then buying a funeral insurance policy would be a good idea for you.
Types of Funeral Insurance
Once you have estimated your expenses, the next thing to do is shop around for the funeral insurance service that suits your needs. You can compare funeral insurance costs for different types of planned coverage and discuss them with an insurance agent. You can also get a quick quote to get a rough estimate.
Funeral insurance coverage can be a term policy or a whole life insurance. A term policy lasts for a specific period of time and covers the funeral costs during that period. Given its limited term, the policy is cheaper compared to whole life insurance which requires regular payment until death. However, the whole life policy guarantees the policy amount in case of death.
You should also look at insurance policies on the basis of cashback or convertability. Some policies, allow you to convert funeral insurance into a standard life insurance after a certain period of time. This allows you the option to continue paying and keep your insurance indefinitely.
Another type of funeral insurance plan adds the cashback feature. You can ask your insurer for cashback after a specific number of years which ends the coverage but lets you get the coverage money which can be put in a savings account for future needs.