Insurance Blog

Funeral Insurance: A Smart Investment or a Waste of Money?

Deepu Verma

14 February, 2024

Reading Time: 3 minutes

Death is inevitable, but planning for it can be challenging. Many people want to ensure that their loved ones are not burdened with the costs and arrangements of their funeral, which can be expensive and stressful. One way to do this is to purchase funeral insurance, also known as burial insurance or cremation insurance.

But is funeral insurance a smart investment or a waste of money? Let's explore the pros and cons of this type of coverage.

What is Funeral Insurance?

It is a type of insurance that ensures that your last expenses in this world are covered and your loved ones are not financially stressed in a situation of grief. Technically speaking, funeral insurance is a type of permanent life policy that pays for the rituals and other activities in case of death of the policy holder.

Interestingly, funeral insurance is one of the least expensive and highly affordable life insurance policy, in terms of premiums paid but it’s designed in such a way that it can cover almost every expense related to the end-of-life event. Be it the Dakshina of the pandit, fee of the Quazi or the money for the pallbearers. It really eases the task of funeral arrangements for your loved ones.

What are the benefits of funeral insurance?

There are numerous benefits of subscribing to a funeral insurance policy to defray the last expenses. If you are pondering whether or not to purchase funeral insurance, here are some practical reasons and benefits of cremation insurance policies:

1. Eliminates the Financial Worries of Your Loved Ones

A dignified funeral is everyone’s right and it can’t be waived off in any condition. Getting cremation insurance establishes your right to a dignified funeral. Your loved ones won’t be financially stressed on your demise if you’ve got a funeral insurance policy in place.

It gives them peace of mind knowing that your funeral costs will be taken care of and that your loved ones will not have to worry about the financial burden or the hassle of arranging your funeral.

2. Flexibility of Covering the Family

Funeral Insurance policies are chiefly focussed on securing the insured’s final expenses. However, most of the policies have other additional options. They allow you to add your family members to the same policy on payment of a nominal additional premium. This rules out the need for separate cremation policy for each member.

3. No Need of Medical Examination

One of the prominent benefits of funeral insurance that sets it apart from other insurance policies is that you don’t have to qualify any medical criteria to be eligible for burial insurance.

Your medical condition has no impact on the premium to be paid. Apparently, absence of in-person medical examination makes cremation insurance policies easy and hassle-free to apply.

4. Affordable with Unchanging Premium

Contrary to the popular belief that all life insurances are expensive, funeral insurance is one of the types of life insurance that’s as cheap as a basic X-ray examination. If you are buying a policy from reputed insurers like Max Life Insurance, Tata AIA, ICICI Prudential or HDFC Life Insurance, you can save a significant amount of money because the final expense policy in India starts at as low as Rs. 118.

Another benefit of buying funeral insurance from reputed insurers is that their cremation policies come with a “price lock” guarantee. It means that the premiums won’t fluctuate for any reasons whatsoever.

5. Ensures Lifetime Cover for the Insured

Funeral Insurance is a type of life insurance that gives lifetime cover for the policyholder provided the premiums are being paid continuously. Once you buy a funeral insurance policy to defray your last expense, it never expires.

If you leave this world with a loan taken against your funeral insurance, the loan amount will be deducted from the final amount payable under policy thus keeping your dignity intact.

What are the drawbacks of funeral insurance?

Funeral insurance can also have some drawbacks, such as:

1. Low return

Funeral insurance may not offer a good return on your investment, especially if you live longer than expected or if the inflation rate exceeds the growth rate of your policy. You may not be able to cancel or cash out your policy without losing some or all of your benefits.

However, there are plethora of instruments available to have good returns but funeral insurance is probably the only instrument designed specifically to aid your family in hardest time of grief.

2. Little Cash Value

When you pay the premium for your burial insurance, your insurer allocates a portion of it to your cash value account. This cash value amount for final expense insurance is much lower as compared to other policies. Although, it grows to a significant amount if you opt for the insurance at an early stage of life.

3. Potential scams

Funeral insurance may be subject to fraud or misrepresentation by unscrupulous agents or companies who may try to sell you unnecessary or unsuitable policies, charge you hidden fees, or deny your claims.

You should always do your research and compare different options before buying funeral insurance, and you should read the fine print and understand the terms and conditions of your policy. You may also consult experts like Last Journey to have an advantageous funeral policy.

Is funeral insurance right for you?

Funeral insurance can be a useful tool to protect your family from the financial and emotional stress of your funeral. You should consider your personal situation, your goals, your budget, and your alternatives before deciding whether to buy funeral insurance or not.

Some of the factors that may influence your decision are:

Your age and health
Your funeral preferences
Your financial situation

Conclusion

From the above discussion and facts referred to, you can easily judge that funeral insurance is indeed a smart investment to safeguard your respect and dignity. It is the best way to ensure that your dignity remains unaltered even when you are not there to make sure of it.

There are certain drawbacks related to cremation insurance but they are limited to the bare minimum and can be eliminated with the help of a trusted funeral services provider like Last Journey and by choosing a reputed life insurance company. You should also consult a financial advisor or a trusted agent who can help you find the best policy for your needs and goals.