Choosing the right type of life insurance can help ensure that your loved ones are covered. It can also be a way to supplement your overall financial plan.
There are a variety of life insurance policies to choose from, including mortgage protection insurance, funeral insurance, burial insurance, and final expense insurance. Understanding the pros and cons of each can help you decide which is best for you.
Mortgage Protection Insurance
Mortgage protection insurance (MPI) can help protect your home and your family’s financial security if you die or become disabled before paying off your mortgage. It can also provide a safety net to help you pay your monthly mortgage repayments in the event of serious illness or injury, which can be particularly important if you’re a primary breadwinner.
MPI is similar to private mortgage insurance (PMI) and may be required by your lender if you have a conventional loan. It’s often used to cover home loans with higher loan-to-value ratios, so it’s an effective way to protect your family and home from the risk of a foreclosure.
Most mortgage protection life insurance policies charge a fixed premium and are only covered during the policy’s duration. This means that the policy’s death benefit will shrink with each mortgage payment that you make, as your loan balance decreases. However, this type of coverage is still a good investment for your family and heirs.
Funeral Insurance
Funeral insurance, also known as burial or final expense insurance, provides a death benefit to help your family pay for your funeral. It can pay a lump sum or monthly payments to a designated beneficiary.
Funeral costs typically increase over time, so it’s important to have enough coverage to protect your loved ones from financial ruin after you die. Burial insurance is one option for this, but it’s also worth considering other options like life insurance or pre-need insurance.
The cost of burial or funeral insurance depends on the company and the amount of coverage. Premiums vary from provider to provider, so it’s important to shop around and compare quotes before making a decision.
Burial Insurance
Burial insurance, also called funeral or final expense life insurance, is designed to cover the cost of a departed loved one’s funeral, cremation, memorial service, headstone or urn, and other expenses. It typically offers death benefits under $50,000, although some insurers offer a higher limit.
Like most other types of life insurance, burial insurance premiums vary depending on your age, gender and the size of the policy you choose. They are also based on your health, so you should ask for a quote from several providers to find the right one for you.
Funeral costs are often a financial burden for families and loved ones, so it’s not uncommon to see people opt for burial insurance instead of traditional life insurance. Policies are usually easy to get and don’t require a medical exam, which can be helpful for those with health problems that might keep them from getting traditional life insurance.
Final Expense Insurance
Final expense insurance is an affordable way to ensure your family will have a financial cushion after your death. This type of insurance pays out funds that can be used to pay for funeral costs, medical bills, or other end-of-life expenses.
Unlike other types of life insurance, final expense insurance does not expire as long as you make your premium payments on time. This type of policy also builds cash value that you can borrow against or use to pay for future premiums.
This is an especially good option for seniors who do not need to replace their income in the event of a premature death, but want to leave their loved ones enough money to pay for funerals and other expenses.
Final expense insurance is also an excellent choice for people who have terminal illnesses or other health problems that would disqualify them from other types of life insurance. There are also guaranteed issue policies that offer no health requirements at all.