Understanding Funeral Expense Insurance
Funeral insurance, also known as burial insurance or final expense insurance, is a type of permanent life insurance. Unlike traditional life insurance, which provides a general death benefit, funeral insurance specifically covers end-of-life expenses such as funeral services and burial costs.
Here’s a breakdown of the differences between funeral insurance and general life insurance:
Purpose:
- Funeral Insurance: Designed to cover funeral expenses, including burial or cremation costs.
- Life Insurance: Offers comprehensive coverage for various financial needs, such as income replacement, debt payoff, education funding, and more.
Premiums:
- Funeral insurance premiums are often fixed and more affordable than permanent life insurance premiums.
- Life insurance premiums can vary widely based on policy type, coverage amount, term, age, health, and lifestyle.
Duration:
- Funeral insurance provides coverage for the policyholder’s lifetime.
- Life insurance can also offer lifetime coverage if premiums are paid1.
Key Benefits
Here are the key benefits of having Funeral Expense Insurance in Canada:
Financial Relief:
Funeral insurance ensures that your loved ones receive a lump sum payment specifically for end-of-life expenses, easing their financial burden.
Peace of Mind:
Knowing that there’s money set aside for funeral costs provides peace of mind for both policyholders and beneficiaries.
Streamlined Process:
The tax-free payout from a life insurance policy can be designated specifically to cover funeral expenses, simplifying the management of funeral costs.
Different Types of Funeral Expense Insurance
In Canada, there are two primary types of funeral insurance policies: simplified issue life insurance and guaranteed issue life insurance. Let’s delve into each type:
Simplified Issue Life Insurance
This type of funeral insurance caters to individuals who seek coverage without undergoing a medical exam. It offers a simplified application process, making it accessible for those with health concerns. While premiums are typically higher than traditional life insurance policies, the death benefit pays out to cover funeral expenses, memorial services, and other end-of-life costs.
Guaranteed Issue Life Insurance
On the other hand, this type of funeral insurance requires no health questions or medical exams, ensuring acceptance regardless of health status or age. Although premiums are higher due to the lack of underwriting, this type is ideal for seniors or those with serious health issues who may have been declined for traditional coverage.
Tips for Saving Money on Funeral Expense Insurance
When it comes to funeral insurance in Canada, there are ways to save money while ensuring your loved ones are protected. Let’s explore some practical tips:
Compare Plans Wisely:
Regularly comparing funeral insurance plans allows you to stay informed about available options and potential cost savings. Reviewing policies annually or when major life changes occur ensures you’re getting the best coverage at the most competitive rates.
Choose Term Life Insurance:
Consider term life insurance specifically for covering funeral expenses. Term policies are more affordable than permanent ones. They provide coverage during specific years (like when you have a mortgage and children at home). Permanent policies are much costlier because they guarantee a payout regardless of when you pass away.
Buy Only What You Need:
Calculate the precise amount of coverage you require. Avoid overprotecting yourself and your family by purchasing only what’s necessary. Consider your debts, income, mortgage, and education costs for your kids.
Take the Life Insurance Medical Exam:
While some policies promise instant approval without a medical exam, these “no-medical” options are costlier. Opt for a standard term life insurance policy that requires a medical exam. It’ll likely save you money in the long run.
Explore Government Funeral Grants:
Group health and dental insurance plans, often offered through employers or professional associations, typically provide more comprehensive coverage at lower rates compared to individual policies. Take advantage of group coverage options if available, as they often offer significant cost savings and broader benefits.
Maintain Good Health Habits
In Canada, government programs provide financial relief to families dealing with funeral expenses. These grants can help cover funeral-related costs through federal and provincial assistance programs, including the Canada Pension Plan (CPP) and specific COVID-19-related assistance.
FAQ’s – Funeral Expense Insurance
Learn more about Funeral Expense Insurance with our FAQ section. Get answers to common questions about coverage, benefits, and more.
