Insurance Blog

Peace of mind in a policy: Unravelling Funeral Insurance Coverage

Deepu Verma

27 March, 2024

In India, where ancient traditions and modern realities intersect, the rituals surrounding death hold immense significance. Cremation insurance, often referred to as “funeral insurance” or “last expense insurance,” plays a crucial role in ensuring a dignified farewell for our departed loved ones.

Despite the rising popularity of cremation services, especially in urban citizenry, there is lack of awareness about the benefits available through these services. Moreover, people are least aware of the facilities they can avail as a part of their funeral insurance cover.

In this guide tailored to the Indian context, we explore the specifics of cremation insurance, its coverage, costs, and the need for its wider adoption.

How Does Cremation Insurance Work in India?

Cremation insurance in India aligns with the principles of final expense life insurance. The insurance companies and trusted funeral service providers like Last Journey have done in-depth research on the diverse practices that are prescribed under traditions and scriptures in different parts of India. This has helped them to avoid the principle of “one size fits all”. Funeral service providers have carefully developed their services with personalised options available for every section, status and religion prevalent in India.

Here are the key aspects to understand:

Coverage Amount: Indian cremation insurance policies typically offer coverage ranging from Rs. 5,000 to Rs. 1,00,000. The payout is made to the beneficiaries or the chosen funeral service provider upon the insured person’s demise.

No Medical Examination: Unlike other insurance types, cremation insurance usually does not require a medical exam. This accessibility makes it appealing, especially for seniors.

Tax-Free Benefit: The insurance proceeds are tax-free in general, ensuring that the family receives the full amount. Moreover, the insurers and the government might be planning towards extending the tax benefits to the insured during his or her lifetime.

Guaranteed Issue Policies: Some policies have no health questions or underwriting, but they come with a two-year waiting period. Policies with health questions cost less and provide immediate coverage if approved. Most of the funeral insurance available in India fall under the Guaranteed coverage category to take away the complexities when the family is facing the most difficult times.

Whole Life Coverage: Cremation policies fall under whole life insurance, with fixed premiums, consistent death benefits, and indefinite coverage. They also accumulate cash value over time. This, again helps the families to deal with the demise of their loved ones without any financial stress.

What Does Cremation Insurance Cover in India?

Indian cremation insurance provides financial support for various end-of-life expenses:

Cremation Costs: Covering the expenses related to cremating the deceased like the cost of wood, samagri, etc.

Urn and Rituals: Funds for selecting an urn and performing rituals according to customs. If a funeral services provider is chosen, the funeral insurance might cover the miscellaneous costs like that charged by the priests or other services.

Funeral Home Services: Charges for coordination, paperwork, and facilities at the funeral home. This might include a hearse van, freezer box, embalming, etc if chosen at the time of issue of policy.

Medical Bills and Debts: Settling outstanding medical bills and financial obligations. This is not a mandatory part of insurance as this gets covered under the other insurance plans. However, the possibility of covering this cost in case of death during treatment is part of the deliberations of future funeral insurance plans.

Importantly, any remaining funds do not revert to the funeral home; they remain with the beneficiaries.

The Need for Funeral Insurance in India

India’s population has surpassed China’s, making it the most populous country globally. With high daily mortality rates, the demand for cremation facilities has outpaced their availability. Additionally, many NRIs (non-resident Indians) have elderly parents living in India. These NRIs often lack detailed knowledge of local rituals and procedures. Funeral insurance bridges this gap by providing prompt assistance during a difficult time.

Death: A Revered Transition

In India, contrary to popular belief, death is not taboo; it is revered as the soul’s liberation (moksha). Hindu philosophy views death as freedom for the Jiva (soul). However, misinformation has sometimes turned this eternal truth into a somber topic. Funeral insurance acknowledges this reality and ensures dignity and respect for the departed and their families.

Funeral Insurance in India: A Reality

Prominent insurance brands now offer funeral or cremation insurance as part of life insurance policies. Premiums start as low as Rs. 118, and coverage ranges from Rs. 5,000 to 1,00,000 or more. As financial literacy grows, more Indians recognize the importance of securing their family’s financial well-being even after they are gone.

Remember, planning allows us to focus on celebrating lives well-lived and cherishing cherished memories.