Differences between term life insurance and funeral insurance?
It is not always easy to find your way through the vast array of insurance policies available to you these days, including at Alpina.nl. Getting clarity regarding the insurance you take out, however, is essential if you want to actually get value for your money and if you want to give yourself and dependents fewer headaches.
Two types of insurance that are often confused are funeral insurance and term life insurance. What exactly do both involve and in what ways do they differ? Read more below so you can make the right choice for your situation, budget and personal preferences.
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What is funeral insurance?
Funeral insurance is an insurance policy that insures you throughout your life for the cost of your funeral after death. This means that the insurer with whom you have taken out such insurance will finance your funeral as soon as you die. As the policyholder, you can determine the size of the insured amount and in doing so, you build up that insured value during your lifetime.
The main features of funeral insurance
Below are the main features of funeral insurance:
1. Funeral insurance is valid for life
When you purchase funeral insurance, you do so for the rest of your life (unless you possibly choose to cancel your insurance), regardless of the age at which you purchase it.
2. Funeral insurance always pays out the money
Thereby, after your death, the insurer will pay out the insured amount to your next of kin to finance your funeral if you have opted for Capital Insurance. This can also be in the form of a package of services and products, in the case of so-called Natura insurance.
3. Funeral insurance insures funeral or cremation expenses.
Finally, funeral insurance always involves insured cremation or burial costs, depending on your personal preferences as a policyholder. A funeral usually costs a little more than a cremation, so you will pay more premium for the former option.
4. The earlier you purchase funeral insurance, the lower the premium.
A typical feature of funeral insurance is that the premium you pay each month depends largely on the age at which you purchase it. The younger you are, the lower your monthly premium.
5. With funeral insurance, you save money
Finally, funeral insurance is the best way to save money to finance your funeral, as it is based on a savings model. Thus, the premium you pay each month is not just lost money but effectively provides you and your dependents with something in the long run
What is term life insurance?
Term life insurance is an insurance policy that works a little differently than funeral insurance. For example, the money is paid to the deceased's next of kin, after which they are free to use it.
Relatives of a deceased policyholder often choose to use the money to supplement their own income or to pay for a vacation or study trip. In many cases, however, next of kin apply the money of their own accord to fund the deceased's funeral.
The main features of term life insurance
Below are the main features of term life insurance:
1. Term life insurance is temporary
First, death benefit insurance is a temporary measure, unlike funeral insurance. This means that a fixed end date of the insurance is set, after which it is therefore no longer valid.
2. Term life insurance does not always pay out
In doing so, the next of kin of a policyholder who takes out term life insurance will not always receive money. This is true only if the person dies before the end date stated on the insurance contract.
3. Term life insurance catches lost income
The next important feature of term life insurance is that it partially or completely absorbs lost income due to death. This reduces financial risks and worries for surviving dependents. Often this money is used (among other things) to pay the mortgage.
4. With term life insurance, you don't save
Unlike funeral insurance, death benefit insurance does not allow you to save your paid premium money to finance your funeral.