There are things you may not know about burial insurance for seniors. The following article contains a hot list of things that you’re going to want to know about this kind of policy.
Table of Contents:
Burial Insurance Overview
Arizona Burial insurance should ALWAYS be structured as whole life insurance.
Whole life insurance is the exact same thing as a “final expense policy”, also known as burial insurance. It’s all the same thing, just under different names.
Like all things, burial insurance has “Pro’s” and “Cons”. There aren’t many cons, so I’ll address these, first.
The Downsides of Burial Insurance
The first con is that it obviously costs money, the policy will be a new expense. The good news is this price will never change- so budgeting this new cost is easy to predict.
Secondly, these policies are not going to have a large payout for your beneficiaries, compared to term life insurance policies, which can easily be $100,000 – $500,000. Burial insurance is built to simply cover cremation, burial and funeral expenses. Remember, it’s not a cure-all for all of your loved ones’ financial needs.
Burial Insurance Death Benefits
These policies typically have death benefits, ranging from $5,000 – $40,000. Policies can be as small as about $2,000, which obviously has a lower premium.
In many cases, you can also increase the total payout to your loved ones, with a low cost accidental rider that attaches to your burial insurance policy. $40,000 with an attached accidental writer, doubles the death benefit to $80,000 if death is within the accidental death category (A great example is a car accident death). It’s a great, inexpensive way to “beef up” your policy.
Those are all of the cons. That’s it. The rest are all pros, and they are significant.
Finally, the last con of whole life insurance, is you must be under the age of 86. Burial insurance is for ages 60-85. However, other whole life insurance can be acquired, for ages 1-59.
The “Pro’s” of Arizona Burial Insurance
You’re never going to have to get insured again, unless you decide you need more insurance because these policies never expire.
These policies are not going to decrease in coverage. So if you start with a $20,000 or a $10,000 a burial insurance policy it is NOT going to decrease, or cut in half at any age, unlike some other life insurance policies.
It’s also not going to increase in cost, so it’s locked for your life, as long as you keep making payments to the insurance company. You’ve got this policy until you die.
These are some of the reasons these policies are such a hot potato. For our clients that are over the age of 60.
Another Pro- Burial insurance is much easier to qualify for, than some of the alternatives. Term life insurance, universal life and a few other types of life insurance, require top notch health. Burial insurance is much more flexible.
Still think you won’t qualify…?
An Inside Tip – Guaranteed Life Insurance
A helpful inside hint- If you have major health issues and if you are ages 55-80, there is a great solution, called Guaranteed issue burial insurance policy. This policy has a two year reduced payout, also knwon as a two year waiting period. If death occurs for you within the first two years of starting the policy. there is a reduced payout to your loved ones. Once you hit that two year mark, then it’s a normal whole life policy for life, with a 100% payout, permanently.
Who Needs Guaranteed?
A lot of my clients require guaranteed issue, as they have health complications. Here are a few more examples:
Kidney disease, heart disease, permanently using a wheelchair, active cancer, heart attacks or major surgery within the last year, heart failure, using breathing oxygen during the day (not a C-PAP- Actual refillable prescription oxygen tanks); Those are some of the more common examples of when you need to get a guaranteed issue policy.
A final Pro, many clients ask about, is called Cash Value.
I won’t spend much time on this topic, in this article, as cash value is often sold as an enormous benefit- and I disagree.
Many agents sell the heck out of cash value.
Cash value is something that accumulates, over years of making payments into ANY kind of whole life insurance policy, whether it is in Arizona, or outside the state. Agents and insurance companies should NOT create hype over cash value. The main reason, this is a no-no… If you pull out your cash value, it will 100% negatively impact/reduce the death benefit to your loved ones- which is why you got the policy in the first place. ALSO- there is risk that if you take too much cash value out of your policy, the policy *can* be forfeit. If you have more questions about this- PLEASE call us directly so we can further clarify.
In the meantime, if any agents make a big deal out of cash value… run away, as they are only singing the Sale Song. Focusing on that topic is a big red flag. I only discuss it in small doses within articles, or directly asked about it. To clarify- cash value is not a bad thing. It’s simply not an asset you should utilize unless you have a financial emergency- and even then, try to find an alternative.