You are never too young to start investing in life insurance. Many life insurance companies offer lower premiums for younger customers. This is because you are more likely to be healthy and less likely to need a payout.
As you review your life insurance policy, consider what the funds will cover. A common question is whether the money from life insurance products can be used to pay for funeral costs. Learn what you can use your life insurance for and whether you want it to cover your funeral.
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Can life insurance cover funeral costs?
Life insurance is meant to help your family cover your costs after you die. Your life insurance policy will help you pay any outstanding medical bills or debt, along with a variety of funeral services.
While your family can use your life insurance payout to cover your funeral, this process takes time. Many people want to bury their loved ones within a few days of their passing. However, it can take insurers up to 30 days or more to review the death certificate and approve a payout.
Even if you have a quality Australian life insurance policy, try to set aside some funds to cover your funeral costs. You might not need to pay for the service in full, but many funeral companies request deposits on services before they move forward with them.
Has COVID-19 changed the life insurance industry?
In 2021, the Coronavirus pandemic saw a dramatic increase in people taking out insurance policies. Many people across the world worried about their health and the future of their families. If you do not have a life insurance policy, you can still get one despite the pandemic.
When you work with an underwriter in the life insurance industry, they may ask if you had COVID-19. If you have been sick recently, they may hold your application for 30 days to review your health.
Insurance companies want to reduce risk in the customers they take on. If you are sick, then you increase their risk factors. The underwriter you work for might also take into consideration your age and any genetic conditions that could potentially shorten your life. These will affect your premiums and is commonplace in the insurance industry.
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Plan your funeral ahead of time.
If you are concerned about your life insurer covering your funeral expenses, there are steps you can take to make sure you receive the funeral service you want.
First, create a document that explains what you want for your body and your funeral services. For example, would you like cremation or a casket? Would you like to have a celebration of life in a funeral home or in a non-traditional location? Even before you evaluate your life insurance policy you can be clear about the type of burial you want.
Different burials come with different costs. A casket alone can cost between $2,000 – $10,000. Cremation services can be more affordable, but they come with additional costs, like the urn you are stored in and the expenses related to wake. Knowing what you want and setting a funeral budget can help you set a budget when the time comes for your loved ones to care for your body.
No one wants to worry about money in their time of need. Work with an underwriter at a life insurance company who can get you the right coverage for your funeral and other expenses. You can also ask about additional life insurance products that are meant to make funerals more affordable. With your planning today, you can help your family when you eventually move on from this world.