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The Difference Between Pre-Paid Funeral Insurance and Final Expense Insurance

In the Senior Insurance industry, Pre-Need Insurance and Final Expense Insurance are becoming commonplace. A typical funeral costs $6,000 but with additional options can skyrocket to more than $10,000. Many people want to shield family members from financial burdens and the stress of funeral planning. But what is the better option to offer your clients?

What is Pre-Need Insurance?

Pre-Need Insurance or Pre-Paid Funeral Insurance is a life insurance policy that covers funeral costs. Unlike final expense insurance, the policy is purchased from the funeral home of your choice, and they are made the beneficiary of the policy. Once the policy is in effect funeral home carry out the arrangements of the person specified for the funeral.

The benefits of a prepaid funeral insurance policy are that the family is shielded from the majority of the funeral costs and the funeral is also planned to the loved one’s wishes. One downside is the Pre-Need Insurance covers ONLY the funeral price agreed upon. So if the policy is for $9,000 but the prices increase to $11,000 by the time of the funeral, the family must pay the $2,000 gap. Make sure the funeral home offers a price guarantee so that in the future the family will not have to pay additional costs. Read the fine print and pick a funeral home with a good reputation and check their policy in the event of closure or change of ownership.

What is Final Expense Insurance?

Final Expense insurance or “burial” or “funeral” insurance is a life insurance policy with a low face, value typically in the $5,000 to $30,000 range. A final expense policy comes in different forms, either term or permanent and depending on the company may have medical or age limitations. However, the growing demand for Final Expense Insurance has more companies adding policies to cover more people.

The major difference between Pre-Need Insurance and Final Expense is that Final Expense is purchased directly from the insurance company and as purchaser you can name anyone to be the beneficiary. Because the policy is purchased directly from insurance company there is less concern about someone embezzling funds or mishandling the policy benefit before its use. With Final Expense Insurance there is more freedom to cover costs besides just the funeral expense. For example if someone passes and they have debts, medical bills, travel costs, or any unpaid bills the final expense policy can cover those debts. 

About National Contracting Center

NCC is a leading senior insurance marketing firm (FMO) specializing in Medicare Advantage, Medicare Supplements, and Final Expense products for independent agents. NCC partners with you to provide support, training, and concierge service for all your insurance needs.

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