Purchasing the Correct Death Insurance for You
Whilst you are still young, it is strongly recommended that you purchase a death insurance policy. Not only will you be relieved that your funeral costs and debts are sorted out but you can live out the rest of life knowing that your relatives can spend the extra time thinking about you and not where the money is coming from.
Basic death insurance means that you can make sure that at the very least your funeral is all paid for before you leave this earth. A policy known as Pre-Need Insurance is available which is specifically designed for this purpose. They are available through funeral homes and it is these homes that are the beneficiary of the policy. This ensures that the funds are paying the funeral costs and nothing else.
The most basic form of death insurance is called a Pre-Need Insurance Plan. This policy provides money that can only be used to pay for the funeral costs; it is not permitted to use the money towards any other payments. Typically, Pre-Need Insurance is available from funeral parlors and funeral directors, who incidentally, are the only organizations that can be made the beneficiary of this kind of plan. Essentially, this ensures that the money is not allocated to anything else but the funeral expenses.
The unique thing about these two types of policy is that you are entitled to name any beneficiary that you want. A friend, spouse, colleague or your children could all be picked by you as the named beneficiary. Insurers usually suggest that it is wise to discuss the policy with the beneficiary to ensure that they are clear on your wishes. Make it clear if there are any particular people or organizations that you wish money to be paid to in the event of your death. Unless you discuss these issues with the beneficiary, it is worth mentioning that they can spend the funds in any way they wish if not told otherwise. It is commonly the case that if any of the funds are left unallocated they belong to the named beneficiary.
It is recommended that if you opt for a single policy or nominate one of your children as a beneficiary, the policy is best put into a form of trust. This is due to tax issues which may affect the policy and death benefit if not within the confines of a trust. Taking out a joint policy for you and your partner is a viable option, however it should be noted that many insurers will only pay out one time and that is when the first death occurs. The remaining partner will not have any death benefit paid out once they have passed away.
In respect of death insurance policies there are two main options to pick from. You could have Term Life Insurance; this basically means that the policy will run for a set period of time. If there are no claims made due to death during this time, then the policy ceases to continue. Whole Life Insurance is a policy that will run up until the event of your death and is not limited to a set timescale. Generally speaking, the premiums for the latter option are a bit more than that of the former option. Read: How To Calculate Mortgage Interest
Getting death insurance is very easy and can be done in person, on the telephone or via the internet. Many insurance agents and companies have their own websites where you can fill in a quick application form. Depending on the type of policy you are after, you may not need to provide any details of your medical history or undergo an examination by a physician.
Purchasing death insurance is really something you should think about before you get too old. It will contribute to a better quality of life; knowing that the funeral costs arrangements are all taken care of will be a weight off of your shoulders.