How will your estate or your loved ones pay for your funeral and final expenses? Whether you want to preplan your funeral or leave it up to your family, planning how to pay for it is essential. Otherwise, you could set up your loved ones for debt and hard decisions.
One of the best ways to pay these expenses is through a term life insurance policy. How and why? Here's what you need to know.
1. Term Life Is Inexpensive
Term life insurance is a policy in effect for a specific period of time rather than until you pass away. While it doesn't accumulate a cash value, its advantage is in its low cost. Compared with funeral, burial, or whole life policies, term life is generally the cheaper way to insure against funeral expenses.
2. You Can Name the Beneficiary
How you want to handle the payment is up to you. You may usually name the beneficiary and decide who will be the custodian of the money for your final arrangements. This could be the funeral home, the estate executor, your spouse, another family member, or even a lawyer or accountant. This lets you work with those you trust.
3. It's Quickly Accessible
If you have enough money in your overall estate, is it necessary to use a life insurance policy? It may still be your best bet for accessibility. Gaining access to accounts in the immediate aftermath of a death can take time and different resources. Liquidating assets like real estate takes even longer. On the other hand, all the beneficiaries may need to get life insurance payouts is a death certificate.
4. You May Cover What You Want
You choose how much you want to fund for your final expenses. Life insurance policies come in both large and small amounts. If you don't want your estate to end up paying for a lavish affair designed by grieving relatives, take out a small policy to be specifically used for your funeral. Want to fund more? Make a larger policy available.
5. Leftover Funds are Flexible
Finally, the term life policy has an advantage over pre-need policies used by many funeral homes. Term life insurance can be used by the beneficiary for any reason — not just final expenses. As such, if they don't need it all for your funeral, it can become part of their inheritance or be used to provide for your dependents in the short term.
Where to Learn More
Want more details about how a term life insurance policy might work with your estate planning and funeral planning needs? Start by meeting with a life insurance provider in your state today.
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